Customer delight - makes it all worthwhile

When you're in business you have to be geared up for the fact that there will be customers who will have issues with various services and products that you offer. Customer support and responding to customer complaints is part and parcel of any company. While quality controls ensure that your deliverables are up to the mark, sometimes clients can still have reservations about what you have given them.

Especially in the consulting line of business, where we're delivering skills, opinions, and knowledge, it often becomes subjective whether we are meeting with client expectations or not. Managing customer expectations is one of the biggest challenges of being in this line of work. In a number of cases, the end result of the engagement is a report or a set of documents and presentations. And very often during the course of the engagement the client often voices their differences of opinion and displeasure at some of the deliverables.

With one of our clients, I almost got into an argument over some points related to the consulting services we were providing. I do strongly recommend to my team to avoid arguments at all costs, unless it is an absolutely critical issue. Disagreements should be voiced, but spats should be avoided. Coming back to this particular case, eventually the client was pleased enough to give us the following testimonial, and it is events like these that make consulting completely worthwhile...

“KK and his team did a brilliant job in guiding us towards the 27001 certification. Their approach was very methodical and systematic right from the stage of gathering requirements in the initial stages to the documentation work and then trainings and audit readiness stages. In fact what I liked the most about their approach was that he focussed on transferring his knowledge to us which has enabled us to sustain the improvements even without his involvement. They never restricted themselves to the scope of the contract. They were willing to that extra mile to make sure that it added business value to us."

Narayana Murthy on Entrepreneurship

I was privileged to attend an interview of Narayana Murthy, the co-founder of Infosys Technologies. The interview session was part of a "Leaders and Learners" session organized by TIE at Welingkar's Institute in Mumbai. Murthy was interviewed by Anuradha Sengupta of CNBC TV18, and a select panel of entrepreneurs. Then the forum was thrown open to questions asked by the audience. Here were some of the key takeaways from this brilliant and humor-filled session:

Q. What does it take to start your own venture?
NM: You need 4 things before you can think of starting your own venture:
1. Idea. The key idea or concept of the service or product you want to sell in the market
2. Market value of the idea. You must have a basic level of confidence in the fact that the market values your product and is willing to pay for it.
3. Team. You must have a team of complementary skillsets - so identify your own strengths, and find people who have different, but complementary strengths.
4. High aspirations. You must be someone who sets his/her sights high, and is willing to work very hard to achieve those aspirations.

Q. What must a startup do for branding?
NM: Do unusual things. Infosys has always attracted the press and positive publicity by doing unusual things, which interest people.

Q. Who were your idols or people you looked up to?
NM: When we started our business, there were already well-established business leaders who had founded and expanded their companies while sticking to sound ethical principles - JRD Tata, even Mr. Birla, TVS, Mr. Kirloskar. Of course, by that time Bill Gates had also become well-known. Intel was one of the foremost examples of success for most security companies to follow.

Q. What is a non-negotiable component when starting your own business?
NM: A sound value system. You have to lead by example, you must walk the talk, eat your own dogfood. Only when will your team trust you implicitly, and only then will they deliver and help achieve the common goals.

Q. What are the characteristics of a successful entrepreneur?

• Ability to work with other people and work in a team
• Passion and will to persevere
• High degree of optimism
• High aspirations for oneself and for the company
• Ability to put long-term interest ahead of short-term benefit

Q. How do you judge the value of your idea?
NM: You should be able to express your idea and its value to the market in a simple sentence. Not a compound sentence, nor a complex sentence.

Q. How do you attract and retain talent?
The leadership must articulate a grand vision - an exciting future. This will create a challenging work culture and attract future leaders to the company. The vision must be a story that is compelling, believable, and intrigues and excites the minds of the team members.

Q. What do you think about work-life balance?
I remember K V Kamath's answer to this question: first let's make a life, then think about work-life balance. I don't understand the concept of a work-life balance.

Q. How do you define success, and at what stage did you consider yourself successful, and why?
NM: I have thought a lot on this subject, and my definition of a successful person is one who when he/she walks into a room, people's eyes light up. If he/she brings a smile to people's faces, then irrespective of whether that person is educated, not educated, self-employed, employed, I would still consider that person to be successful. And going by that definition, I am still not sure whether I would consider myself as being successful.

Interestingly, Murthy's favorite books are Richard Feynmann's "Lectures on Physics", and "History of Mathematics" vols 1,2,3.

How to get started on your own business

Just a quick short post to answer a number of similar sounding emails I get on how to really get started on one's own business. Here's the lowdown on the logical flow of any enterprise from birth to growth.

• Ideation. The idea is the key. First come up with what you want to sell. Whether it is a product or a service or a combination of both. The main thing is to come up with an idea or a set of ideas.
• Marketability. The next step is to test the market for the viability of your idea. Before you quit your job or your college or even your current venture to start a business, you must have a reasonable amount of confidence that the idea works. You might even be looking at funding, so before you approach friends/family/VCs you should be convinced yourself that your idea has a market.
• Team. This is a tough ask. But if it is possible you should put together a team that complements your skills. So for instance if you are technically very good, find out someone who is good at marketing, and if possible, also someone who is good at finances. When I started out, I filled in the technical strength, and my father was around for the financial part. We still remained weak on the marketing front, and it took us quite a few years to fix that.
• Business plan. The next step is to articulate your idea. To put together a formal business plan which outlines your main idea, lists out potential target markets, the resources required to bring the idea to fruition, the competition you face, a SWOT analysis, projected cash-flow for the next 2-3 years, and most importantly your team profile.
• Funding. You may or may not need funding. So this stage would be one where you go out and seek the minimum amount of money that you need to start off your business.
  
• Registration & Incorporation. There are legal formalities to be completed before you start on your own business. For a sole proprietorship, there is not much to do, but for private limited there is quite a bit of paperwork you will need to get done.
• Stationery & Website. You will have to get your basic marketing material in place - a website, visiting cards, logo, letterheads, etc.
• Execution. This is the rest of your life - beat the pavement trying to get clients, call up all your contacts, try to advertise and market your services/products in the best manner possible, land a few deals, execute on them, invoice them, get the money in the bank, go treat yourself to a nice dinner somewhere!
  

How I got my first 5 clients

Someone suggested that I should write a post about how to market a consulting service. While I have a post on the subject, the reader also suggested that I could write about how I got my first five clients. As you might guess, most of these project wins were due to luck rather than any marketing skills from my end. In fact, our first marketing person came on board only after 3-4 years of being in business.

1. Client #1 - State Bank of India. Sitting around in office, we asked ourselves (there were only 2 of us), who needs our services most. The answer was banks. Who's the biggest bank in town - the State Bank of India. So we went to the SBI website, found a link to their organizational chart, found out the number of their chief manager - IT, called him up, and went to meet him. We explained that we could do a penetration test - an attempt to break into his site after receiving proper authorization from him. He was convinced, we sat down to negotiate the price, and within a month we had our first order.
   
2. Client #2 - Western Railways. A friend of my father's heard about my venture, came to meet me, introduced me to the head of IT at HPCL who was a friend of his, who in turn introduced me to head of IT at Western Railways, and we did a free penetration test for him. Later on, he gave us the contract to fix the vulnerabilities.
3. Client #3 - a US security firm. An elderly gentleman from the office next door to ours used to drop by to chat away, since neither he nor I had much work back then. On his 3rd or 4th visit he actually asked me what I did. I tried to explain to him in layman's language that I was running a computer security consulting firm. He excitedly explained his own know-how on the subject, which was surprisingly good. He then told me that his nephew was in the same business, but in the US. And this gentleman in turn was running a leading-edge security product company. I dropped him an email, his India partner contacted me, and then put me in touch with a leading Chartered Accountant who was doing accounts audits for a number of large firms in India. These firms were approaching him to do IT audits as well. These he started to outsource to me, and we still do excellent business with him. Later on the US company also outsourced security research work to us.
   
4. Client #4 - Directorate General of Shipping. The head of IT at Western Railways was a good friend of the head of the Directorate General of Shipping. When the DG Shipping person spoke with the WR person about an IT problem he was facing, he recommended my name.
   
5. Client #5 - Middle East partner. In our free time, we used to keep ourselves busy developing free tools, writing articles, and trying to get speaking engagements at various seminars and conferences. All these activities resulted in increasing our visibility and enhancing our brand image. It also helped enhance our individual consulting profiles. A security solutions company from the Middle East contacted us for selling them one of the tools we had built. We explained that the tool was free, but they wanted us to make modifications to it, and asked us to price the effort. That specific deal never went through, but slowly they started outsourcing various security engagements to us, until the Middle East became our largest source of projects.

So to summarize, some of the things that a fledgling consulting firm could do is focus on:

• Use references, contacts, and word-of-mouth as much as you can. I still evangelize my products and services shamelessly at every opportunity. But there is a way to do it
  
• Search engine optimization
• Writing articles, toolkits, and maybe even books on the subject
• Contacting the larger consulting firms in your space so they may throw some projects your way
• Hold free workshops for people who might be interested in the subject

The art of the bounce back

We all talk about the fact that winners never quit, and quitters never win, etc. But here's a very nice article that talks about the fact that most high-achievers in life usually fail often, and fall harder than most of us. But then they also succeed far more spectacularly. So I guess it is about taking calculated risks and sticking with your ideas if you really believe in them.

The article talks about Steve Jobs who was unceremoniously kicked out of Apple, and then was brought back in to script one of the greatest turnaround stories in corporate history. Not to mention his amazing success with Pixar animation, and of course the iPod and iTunes and iPhone innovations. It also talks about Donald Trump (read his Art of the Deal) for someone who went completely bankrupt and then rose back again to become a multi-billionaire.

Then again you should not be one of those people who stick with an idea even though it has no chance of working. Here's the irrepressible Seth Godin in "The Dip - a little book that teaches you when to quit".

Interview on entrepreneurship

Quite some time back (when my blog used to be anonymous) I'd done an interview with the folks over at Voice of Ambition (VOA). Now that the blog isn't anonymous, I thought it would be a good idea to link to that interview in case anyone wants to hear it. Here are the details:

"K. K. Mookhey founder of NII consulting tells us how he quit his engineering and started his own company. He answers questions like where did he get his capital from? What was his business plan? How much was his initial capital? How he registered his company? How much it costs to register a company? What sectors provide an opportunity for new entrepreneurs? Who is their first client? Who is their biggest client? Is he willing to provide advice for new entrepreneurs? And much more."

Direct link to the episode is
http://www.voiceofambition.com/voa/component/option,com_remository/func,fileinfo/id,28/

(Almost) all your income tax queries answered

I just chanced upon an excellent blog that has answers to quite a few interesting income tax queries. I don't like the layout of the site, but the content is quite good. Check out Tax Worry.

Insights of the day - building a core management team

I happened to attend another excellent TiE session on building a core management team. It was headed by Parag Paranjpe, Director, HR at ICICI Venture. Some of the key takeaways from the session based on inputs from Parag, and the other attendees were:

• Talent looks out for opportunities for that talent to be harnessed. So your key USP has to be what opportunities do you provide for exploiting potential.
• Star employees look for autonomy and freedom - an equal stake in the organization. They want to make the organization bigger and share in the wealth that they help to create.
• Every leader must aim to make himself/herself obsolete in order for the people working under that leader to reach their full potential. The leader must then redefine his role and responsibilities and work to achieve a different set of goals.
• One of the most important attributes to look out for in a candidate is personal integrity. And the best way to determine this is to check for references and learn to read between the lines when the references respond to your queries. Parag gave an example of ICICI Venture contracting an international firm to do a background check on a candidate they were hiring for their Zurich office. And they looked at the huge fees paid to this firm as an investment that would pay off. But he said, that was only reducing the risk, we still would never know for 100% sure if all that we were told by the candidate is correct or not.
• Also, while hiring try to determine whether the employee is joining you for money or for a higher purpose. Does the candidate seem to buy into your vision or is simply making the jump for a better pay package?
• The past history of a candidate is the best indicator of future behavior. Dwell into it, and ask deeper questions based on the candidates previous profile. Everyone promises great things in the future, but have they delivered in the past?
• Try to determine as accurately as possible the real reasons why the candidate is leaving his previous company and joining your company.
• Another important aspect is the cultural fit. How well do you think the candidate would fit into your existing corporate culture. If your existing culture is open and autonomous, does he or she have the ability to work and excel in such an environment or is he/she a very hands-on micro-managing type leader?
• Other ideas were to ask candidates to write down their answers on questions such as achievements, failures, goals, and dreams, rather than ask them to answer verbally.

Insights for the day - V. S. S. Mani from JustDial

I just came back from attending a very insightful personal session with V. S. S. Mani the founder of Just Dial, which was organized by TIE.

JustDial was started somewhere in 1995 after a lot of false starts by Mani, who was earlier director at Ask Me services. Started with a capital of Rs. 50,000 it is now a Rs. 100 crore company with a valuation of over Rs. 500 crore. From days when they were selling wedding planners to generate revenue to today where PE's and venture capitalists are being rejected because they simply don't want any more funding. Here were some key takeaways:

1. When the whole world and its aunt was harping on about the dotcom boom, Mani decided to continue his information services business through the telephone model, and not chuck it all away for an online model. He profited at that stage by selling part of his stake to a US investor, but didn't spend truckloads of cash on building a dotcom and promoting it. He says the Internet infrastructure was so pathetic in 2000-2001, that there was no way that a dotcom business would possibly work well.
2. The key to a successful business is scalability. If you can tell a story to your employees, your partners, and your investors about how you're going to be scaling up the company, how you're going to grow and expand, then you've got a winner on your hands. If your business doesn't scale, do it differently, or do something different.
3. If possible do a short course on financial accounting, and learn the basics about accounting, balance sheets, profit and loss, and cashflow. That is essential, because if you take financially bad decisions your business will crumble. It is like a baby that needs proper care and nurturing.
4. He doesn't stick to any office hours, but does not believe in delegate and forget. He is not operational, but when he delegates, he follows up - every day! He says, in India, your managers and employees will start nodding their heads about how they've understood what needs to be done, but won't do it, or won't do it right, until you follow up and oversee them.
5. When you are growing your business, don't be pretentious. Don't try and show off that you're doing great. Investors don't necessarily want to see great infrastructure, they want to see the virtual reality world you are going to build and that you are asking them to invest in that world. Not the world you live in today. He started off with a small cubicle in Nariman Point, before moving to a 300 sq. ft. shop in the suburbs, and then adding two more shops of 300 sq. ft. each. And that was his situation even in 2000 when the US investor decided to pump cash into his business.
6. When asked about the importance of branding, he said the most important branding is excellent executions. Happy customers will build your brand much better and much bigger than anyone amount of advertising or PR will. Word of mouth is the best publicity you'll ever generate.

Married to your idea?

I just had an epiphany of sorts a few days back.

I was attending a TIE forum meeting, when Manak Singh, the convener of the forum and I began exchanging notes on business in general. And he told me that at an earlier TIE conference, they had invited Vivek Paul of Wipro. One of the key things Paul said was that the problem with a lot of Indian entrepreneurs is that they often get married to the idea with which they start their business.

They first decide that they are going to sell a particular service or product, and then go out to look for a market for that service or product. The way it should ideally work is an outside-in approach, where you first see what the market really demands and then try and deliver that, instead of an inside out approach.

The entire discussion started when Manak Singh asked me about scalability, and I said pure security consulting services does not seem to have the ability to scale - the market demand does not enable the kind of growth that I would ideally like.

I then took this discussion to our annual bootcamp, where once a year we all meet and present on various topics, and throw ideas around. When I presented the vision for the next 3 years, the teams started to question our ability to achieve the numbers based on pure consulting services, and then the suggestions started to pour in. We need to go beyond just pure advisory services, get into implementation, product reseller-ship, and maybe even into network and system integration.

I'll keep posting on how the expansion plans work out, but I got a good feel about this. Although, we might have been earlier leaving money on the table by not aggressively pursuing other projects, it won't be the case any longer!

So maybe a key question that an entrepreneur needs to ask is whether they are the only buyers of their idea. And maybe even more importantly this is a question that entrepreneurs need to keep asking throughout the lifetime of their companies. I could quote a couple of very interesting examples here: Nokia started off as a wood-pulp unit, then was bought over by a rubber manufacturing company, and then merged with a company manufacturing telephone cables. This fusion company was manufacturing paper products, bicycle and car tires, footwear (including Wellington boots), personal computers, communications cables, televisions, electricity generation machinery, capacitors, aluminium, etc.

Another intriguing example is 3M, their most popular product being the Post-It notes. Very few people would know that the name 3M stands for Minnesota Mining and Manufacturing Company, which went through a financial crunch, got out of the mining business, and became what it is today because the people running the company did not feel that they had to remain "loyal" to the original idea! Read about its fascinating history here.

Funding your business using credit cards?

I just came across an article about using credit cards to fund your startup. Although, the article is for the US environment, I think this is a patently bad idea, especially in India. The current interest rates on credit card debt are close to 2% per month, which is 36% per year! If that is not usurious, I don't know what is. It might actually be cheaper to go and raise money from your neighborhood money-lender!

The rules in India allow the directors to pay for certain expenses of the company from their own resources, and to then get reimbursed a few months or maybe a year or so down the line when the company has started generating enough funds. Knowing that fewer than 5% of new ventures actually succeed, why take such a huge risk and be saddled with debt and surmounting interest costs?

In any case, rolling over credit card debt, or switching from one provider to another just because you're exceeding your credit limits on the first card, means that you're spiraling way down a debt trap. Doing this, when trying to get your business up and running is a horribly bad idea. So don't fall for the temptation of abusing your credit ratings you might have built up by religiously paying off your credit card bills while you were in a regular salaried job. Your income when running your business is going to be close to nil for the first year or so. It is far better that you work harder at building up the funds yourself or rallying family and friends around to the idea of supporting your business.

Choosing my problems

One of the biggest challenges of being an entrepreneur is the fact that in most cases you've got to fight your battles alone. Some of us have mentors, some of us come from a family with a business background, and maybe some of us have an excellent core team. But for a lot of us, the problems that we face in running a small-medium business are more or less entirely ours to face and resolve. Whatever be the case, one has to accept that problems will occur. There is no business, or for that matter no serious activity, which is not beset by its own unique set of problems.

The trick is to accept this fact, and to face most of your problems with as much equanimity, humility, and introspective ability as you can. In most cases, I find I can manage all these virtuous qualities in some measure or the other. Cash-flow issues - we've faced them earlier, and have managed to come through. Plus the receivables list does tend to give one comfort that sooner or later the money is going to come through. Client issues - some clients are generally painful, most others have genuine grievances. Nothing that cannot be resolved by openly asking them what they would like us to do, negotiating the extent to which we'll go, and then delivering on it. As long as they see we are sincere in our commitment, they'll usually stop being adversarial, and start looking at how they can work with us to solve the problems at hand. Lack of a strong pipeline. We've faced that situation earlier as well, and usually the lull lasts for no more than a month or so. A weak pipeline also means people sitting twiddling their thumbs. But constant communication, research projects, and trainings can help keep them productively occupied. Employee performance issues - again set targets, agree on them, measure them, and if they consistently under-perform, ask them to leave.

The one problem where I can simply muster up no equanimity is attrition. And we usually have waves that come in about once a year, when the level of attrition can quite simply be called an exodus. Each time, I try and introspect what we could have done better, and we try and do it. And each time it seems as if we're building a castle right near the shore, and a huge wave comes in and washes it right away. Last time around we introduced incentives and a team structure to help curb attrition. I also reduced my own involvement in project execution. This time it seems we need to dig down deeper to find out what we need to do, to get ahead of the attrition ratios that plague us. What hurts about attrition is the feeling of loss. You spend time building a relationship, investing in people's learning/training, you see them grow in confidence and technical skills, and then one day it's pretty much all over. I can tell you the worst day in office is when an email with the subject-line "Resignation" or "Sign-off" or whatever term is vogue lands up in my inbox.

So if I had to choose my problems - I'd say give me anything except attrition.

Due diligence of Indian companies

Came across an interesting paper on what investor should look for when investing in small and mid-sized Indian companies. It is an important read, because for a small business entrepreneur it gives you a lot of ideas on what your company should have to be able to impress a potential investor. The full paper can be downloaded here.

Here is a summary of the key points from the paper:

Operational legitimacy - is the company running a legitimate business, or are the bulk of its revenues coming from front-ending operations. There have long been rumors that a number of small and mid-sized IT companies serve as fronts for small to large amounts of money laundering.

Quantitative Criteria Matching - most investors have specific criteria which the target company needs to match. These are typically in terms of turnover, profitability, number of years in operation, etc. If your company does not meet these criteria - say $2 million in turnover - it would naturally not be in contention.

Leadership & Management - the investors will want to see who is in your core team, or even if there is no core team, they would want to evaluate your skills in terms of management ability, leadership, vision for the future, principles and values you espouse, your track record, and experience either working for other firms or successful ventures in the past.


Growth potential: How quickly can your product/service lines grow, and if they cater to specific market segments, are those segments by themselves also poised for exponential growth in the overall picture of the country's economy? What is your business plan, and what strategies have you envisaged to achieve your targets, and your degree of innovation.

Possible exit strategies: At the end of the day, all investors want to see returns on their investments. And investors in small- to medium- firms are usually taking a much higher risk, and consequently would expect much higher returns. Especially, since only 10-20% of their investments actually pan out.

Market reputation: What do your customers, your partners, and your employees say about your firm? As a small business it is unlikely you will have achieved a lot of press publicity, so your reputation almost completely depends on the people who know you or your company on a one-to-one basis.

NEN - an interesting resource for entrepreneurs

I was recently contacted by the NEN - the National Entrepreneurship Network - to take a look at their website and what they do. I quite like the resources available on their website, and would recommend that you may read up on some of the more interesting articles and interviews. They also have an Ask The Expert section, where they have experts address various aspects of entrepreneurship.

They claim to be non-profit, so I guess they will continue to provide as many resources for free as they can. Some of the links I would like you to check out would be:

• Ask the Expert. The current link features Pradeep Gupta who answers questions on Angel Investing
• The Weekly Startup. This section looks at promising and successful startups and can be a good source for ideas and inspiration.
• Resources. All the rest of the resources on the website packaged together

So let me know if you liked the website, and I'll check and see if there are other such websites out there.

Worst VC Investments

Here's a very interesting list of the top 20 worst VC investments of all time. My favorites include Pets.com, CueCat, and Procket.

Really, makes you think when's a good time to sell off one's firm if the valuations can go up and down so dramatically. Also, with Sabeer Bhatia back in the news it makes you think whether the $400 million he sold Hotmail for was the right price, considering its worth a few $billions now. But in a recent interview he said something very straightforward, "When you've got $5000 in the bank, and someone offers you $400 million, the choice is pretty simple". Especially, when the first offer he got from Microsoft was a measly $160 million.

Running/starting a business - frequently asked questions

Q. What will be the tax structure for a sole proprietorship?
A. As a proprietor, you will create a profit-and-loss account of your business. Here you have the advantage of putting in a lot of your business/personal expenses into the P&L account. This should ideally be avoided as you grow, but initially you can reduce your tax burden with this. The tax you will end up paying is only on the *profit* of your business, and not on all the income. If you accept income directly on your name, you will have to end up paying tax on all the income. So proprietorship is the smarter choice.

The other tax component you need to be aware of is Service Tax. If your revenues exceed Rs. 8 lakhs per year, you are liable to pay Service Tax every quarter at the rate of 12.36% on the income. For this you will need to obtain a Service Tax number by registering yourself at the local excise office. This is for services. If you are going to be selling products, you need to register for Sales Tax or VAT (depends on the rules in your particular state). For this as well you need to check with your local excise officer. More information on Service/Sales tax is available here
http://cexmumbai3.gov.in/


Q. How do I start from scratch?
A. Good to hear that you're looking at becoming an entrepreneur. There are basically two approaches to starting your company:
1. You could plan, map your strengths, product offering, and then see whether there is a market need for it, what resources you would need, how much funding you would need, and then build all of this into a business plan.
2. You could jump right into the deep end of the pool, and follow a 'shoot-from-the-hip' kind of cowboy style of doing things

I adopted approach #2, but wouldn't always advise it. The important common points in either approach are:
1. You have to offer something that the market will pay you for
2. It has to be something you would love doing irrespective of how much you get paid for it

The current economic and business situation is such that you could start off on an experimental basis while you are still working. And then you could quit and begin full time. I was slightly advantaged because I started at 20-21 and didn't have a family to support. Those sorts of things add responsibilities and must be duly addressed.

I started my company with a Rs. 2 lakh capital, and built it into a 100 times that in about 6 years. My blog does contain posts on how to start your business from scratch. Take a look and see if it helps.

Q. Can you tell me if VAT and Service Tax are applicable for freelance software solutions provided locally and for abroad?
A. Service Tax, yes, only if your annual turnover exceeds Rs. 8 lakhs
VAT would be applicable only if you resell other software products, or you have built your own products.

Q. Do I need a PAN card for a proprietorship firm?
A. No, you can use your personal PAN number. A separate PAN will be required only if you have incorporate it as a Pvt. Ltd. firm. Approach the nearest Income Tax office and get in touch with the PRO (Public Relations Officer) for details.

Q. Do I need to register for Service Tax or VAT?
A. Service Tax, yes, only if your annual turnover exceeds Rs. 8 lakhs
VAT would be applicable only if you resell other software products, or you have built your own products.

Q. Where do I get my seed capital from?
A. As to your funding requirement, I suggest you first list out exactly how much money you need, for how many months, how you intend to earn revenues, how much revenues you are targeting on a monthly basis vs. your monthly expenses to run the company. Basically, try and build a rudimentary profit-and-loss sheet, and see where your break-even point is. How do you intend to pay back the entity who loans you the money.

Taking money from friends/relatives may sound easy, but it isn't always so. What if your venture doesn't succeed as much you had planned. You will damage the relationships also. But if it is a small sum, and you are confident of returning it, then this is the best option. Banks will ask for collateral to give you a loan, and this might be difficult, unless you mortgage some family property or other assets you have.

But first come up with the exact amount of money you need and then try and figure out your sources of funding.

Q. I am currently working at a Pvt Ltd Co. and am starting my own propreitorship firm from my home. Its a services business where I would be launching my first portal soon. I have acquired a gumaste license. Kindly inform me about the other requirements specially relating to taxes. Do I need a seperate pancard for the firm and besides registering for the service tax which other taxes do i have to pay?
A. If you are running it as a sole proprietorship, you can continue using your personal PAN number. For purposes of tax calculation, you need to prepare a profit-and-loss account for the proprietorship firm, and then include only the profit (if any) into your total taxable income computation. But if you incorporate it as a Pvt. Ltd. firm then you need an additional PAN card.

Besides service tax, if you have employees you would have to pay Fringe Benefit Tax on the benefits you provide to your employees (such as travel, food, conveyance, entertainment, petrol diesel, etc.). You also need to register for Professional Tax for your proprietorship firm. If you sell or resell any products, you would also need to register for VAT or Sales Tax. If you have employees, you need to deduct tax at source, and for this you need to register for a TAN number.

Please check with a professional CA and CS (Company Secretary) for the latest laws and regulations in this regard.


Q. Can I have a current account (as the sole Prop) in my name but have an operational business name for website/visiting cards etc. Is it mandatory to have the name registered?
A. Your clients will know you by the name being used on your website and visiting cards. But then when you bill them or ask them to make a payment, it will be a different name. This will create a slightly negative impression in their minds. It is best to focus on brand-building right from the start.

How to register for Sales Tax / VAT in India

Recently, we got into reselling products in line with our consulting work, and also developed a couple of new products. But in order to sell products within India, we need to register for a Sales Tax or VAT (Value-Added Tax) number. This process is pretty straightforward:

1. Locate the office of the Central Sales Tax Office in your city. Being in Mumbai, a simple Google search turned up the location of the office at Mazgaon - http://salestax.maharashtra.gov.in/communicationcenter/contactusShow.php
2. Approach either the Public Relations Officer's desk there, or go directly to the Registration Department and collect the forms.
3. We needed the following supporting documentation along with the form:
• Company's PAN Card
• Director's PAN Card copy
• Two proofs of Director's residence - I used my passport and a phone bill
• Two proofs of place of business - we used our Leave & License agreement, and the electricity bill
4. The form is pretty straightforward to fill, and you need to ask for the one related to Voluntary Registration (VRS). You will need a Sales Tax Professional to sign on the form, and the Mazgaon building also houses the central office of the Association of Sales Tax Professionals, so finding one shouldn't be all that difficult.
   
5. It cost us Rs. 5000 as fees for VRS, and nothing under-the-table
6. The Sales Tax or VAT number is sent across by post in about a week's time

The main thing to keep in mind is that VAT returns need to be filed every quarter, and you will need to get a qualified CA who is capable of auditing and signing-off on VAT returns. My current CA has expressed his reluctance to process our VAT returns, so we are on the lookout now for someone who can do this.

10 ways to get business when bootstrapping

Some of these headlines are beginning to read like the advertising gimmicks from fly-by-night online operators. But when you're bootstrapping your business, and don't have much in the way of funding. And possibly no sales or marketing staff, here're some ideas on how you could get leads. Caveat: this would work best probably only for consulting companies, but then again, it just might work for anyone. Here goes:

1. Subscribe and post to mailing lists: In our line of work, there are a number of mailing lists. Some of these have subscriptions of over 1 million members (Bugtraq). When people send in queries, and if you have sensible answers to give, it helps to put your name out there. If I read someone's reply to a query, which I find useful, I will often check up on that person's website, and see if there is any business potential. Similarly, if you post answers and put your contact information in your signature, it helps to put your name out there.
2. Write articles: Often, when we don't have business in a particular segment of our work, say SAP Security, we'll go ahead and write up on it. If an online or offline journal publishes the article, that's great. If not, we put it up on our website, and sooner or later the search engines will pick it up and send inquiries your way.
3. Speak at conferences - big or small: Within your area of business, there would be a number of professional societies. These would normally meet weekly or monthly, and quite often they invite guest speakers. If you take membership of these societies and take an active role, you're very likely to get noticed. They are also often short of good speakers, so if you can play it to your strength then you would again be able to put your name out there.
4. Write a blog (not an anonymous one!): If you post good stuff on your blog, especially directly related to your area of expertise, business is quite likely to come your way. Of course, anonymously blogging like here doesn't help much in the way of getting business, but then again that was not really my objective :)
5. Call up the bigger fish: In any line of work, there are bound to be the big guys who would be more than willing to send business your way, especially if you specialize in a niche area. For us, initially our area of expertise was (and hopefully still is) penetration testing. The big consulting firms were more interested in large audit projects, and were more than willing to offload the smaller ones to us.
6. Call up existing clients: Asking for referrals is one of the best ways to get business. In fact, why just clients. You could call up everyone you know - vendors, suppliers, friends, ex-employers, etc. It doesn't hurt, and most of our large deals have landed up in the most unexpected fashion.
7. Get your website listed: Build a cool-looking website and get it listed in a number of online directories which may be specific to business in your area. Both Yahoo! and Google have directories and you could try and get it listed there. There are also online Yellow Pages-style sites and you could try getting listed there
8. Drop flyers in your office complex: This might be a slightly desperate measure, but what the heck. Get one-page flyers printed and post them around your office complex or in buildings next to the one you work in.
9. Put up hoardings if possible: Where we work, the law of the land allows us to put up a hoarding outside our office. And thankfully for us our location is right on one of the busiest roads in town. So everyday thousands of people see the hoarding. Not that we've gotten a lot of direct business from it, but every now and then we meet someone who's seen it and it helps create recall value.
10. Do work gratis: This is probably the last resort, but if a large client is willing to give you a letter of appreciation or recommendation for some free work, then you might as well do it. When starting out, we did a few free assignments, but this must be avoided to the extent possible.
    

10 Questions with a woman entrepreneur - Shibani Jain

Shibani Jain is the CEO of Craftsbridge India Pvt. Ltd. A first generation woman entrepreneur, she has stuck through a lot of ups and downs to build a very unique and inspiring business – bringing India’s traditional crafts and arts to a wider market, using the Internet and direct marketing as tools to ensure the craftsmen get their right recognition and dues. I interviewed her online a few weeks ago, and gained some significant insights into a woman’s entrepreneurial journey.

1. Could you brief us about your company's main offerings?

Shibani: We offer designer and special skill products which map current corporate requirements. We work with special skill groups across the country and our sales help these small rural urban groups to generate income.

We offer corporate promotional and motivational products like desktop products and office accessories.

We arrived at this focus after a lot of trial and error. We tried many other things at first – home textiles which we were exporting; retail sales for domestic markets (garment apparels, etc). We even had our own stitching unit. But then, we realized its not possible to do so much; especially since they were all virtually different businesses – with separate infrastructure requirements, different markets and different production bases. We decided to cut down and we focused on the business where we had the strongest market traction.


2. Since your website is one of the primary marketing channels, what strategies would you advise to promote one's website and make it more productive in terms of customers and revenues?

Shibani: Our website is only 7% of our total business today. I would advise the following for similar ventures:

1. Unique offerings
2. Decent strategic tie-ups/partner sites to ensure you get the eyeballs
3. Constant renewal of offerings and content

The web site is more a promotional tool for us, today than bringing in real business. But we find it useful to refer our customers to our site.

3. What prompted you to begin your current venture? What thought process led to this idea, and what initial challenges did you have to face?

Shibani: I was a web and multimedia designer and always interested in handicrafts. We thought that we could make a difference to this business (even if it was done in a small way to start with) with our ability to understand current market norms, design and bring in professional inputs.

We were also excited by the concept of "customized crafts". Being handmade product, it is relatively easier to customize a product with a special message or specification or color, even in small quantities. We thought of how a "grain of rice" can be packaged nicely with a hand written message and magnifying glass and sent off anywhere in the world.

And we were excited about the fact that we could be the one middle point between the end buyer and the end producer. It was exciting to visualize a situation where we could be the bridge between the rural/grass roots producer who has no market access and the end buyer who has no idea about the craft producer and their stories. It was interesting from a social and creative perspective.

We felt this was possible with a dot com model - with producers on one end and buyers on the other. In fact, we were incubated as a dot com. We made it through incubation funding, but were late in the dot com boom. The bust ensured that no one even heard us out as a dot come investment. The choice before us was either to shut down or change the model. We changed the model and started selling directly to corporate buyers.


4. When the chips are down, how do you deal with those kinds of situations?

Shibani: We have had many times when the chips were down. And we persevered. I did not give up. We evolved and sharpened our model in terms of cutting costs, reducing overheads, sharpening our focus, building systems and processes. We had to go through really tough transitions, like when I closed down the home textiles exports business – it was a harrowing time. We had to let go of trained staff, say no to customers who had started initiatives with us and manage all excess raw material fabric stock which was left over. At this time we simply stuck to our guns, gave ourselves a time line and swallowed our losses on this.

Another transition happened when my partner who headed the corporate business suddenly decided to quit after 5 years of managing this business. We then had to transition and learn many things afresh. The knowledge of the business went with him. We had a huge struggle just to re-educate ourselves about our customer requirements, vendor capabilities and issues and so many other things. But this transition actually resulted in us moving from a one man show into a 'team' approach. We built a team and dependence on one person is much reduced today. We also focused on more documentation, systems and processes at this stage.

5. What plans do you have for the future for your company?

Shibani: We have many dreams – of them one is that of having our brand recognized in the form of retail stores of our own. The other picture is to take our gifts offerings to foreign shores.

6. If you had to do it all over again, what would you differently?

Shibani: We had very high costs when we started up - manpower, office, etc. I would now start like a garage operation if I had to restart. I would also focus, focus and focus from day one.

7. What drives you to work everyday?

Shibani: The thought that there is so much more to do, that we have only scratched the surface. The fact that I have something new to learn every day some new idea to pursue.


8. What three things would you advise aspiring women entrepreneurs?
Shibani:
1. Be courageous. Do not worry about the fact that you are a woman and chances are that others will not worry about it either. Very often the problem is not external if it’s not internal.
2. Find and use external support. Today women entrepreneurs have a lot of external support- special funds, working capital loans, network groups- find them & use them well. Am not exactly aware of which ones, but banks like SIDBI, women's cooperative banks are women friendly. To be honest I have not had to find one myself- but they are there- on the net/banking community/funding groups.
3. Manage your guilt well. If you also have a family to look after. Guilt is not good for you/your family/your business. You might as well realize that this is what you love to do and your family might as well realize this too! Honesty is the best policy here in more ways than one!



9. What books or events have inspired you the most?
So many books! From Ayn Rand (We the living, The Fountainhead) at 16, to Herman Miller (Siddhart) at 20 to Celestine Prophecy (colin wilson?) To Conversations with God recently.

I was also influenced by books like "All paths lead to gold" and "Winning" by Jack Welch.

On events – I did a course in Vipassana meditation in the mountains of Igatpuri- this is a 10 day silent course- and it changed my life. It taught me to view life in perspective- and the fact that mind control is the most important control to have. The mind must not dictate you- you must control your mind.

Also every time I see street children in India, I feel compelled to do something. Anything to alleviate the suffering that so much of mankind seems to have. I feel outraged that so little is done and about the unfairness of it all.

I feel sad when i see beautiful, skilled products, sold in a shabby way, at shabby prices and in a shabby manner. I feel bad that the artist who created such a beautiful product is not getting his/her due- neither price nor recognition. I just feel that it’s all a criminal waste.

10. What advice would you have for aspiring entrepreneurs in general, and women entrepreneurs specifically?
1. Out of 10 start up businesses only 3/4 survive. The trick is to persevere and to believe in your picture.
2. Being at the right time and at the right place is important when you start- a good idea is not enough- a hard look at viability is a must.
3. Being an entrepreneur is very tough- it’s even tougher if you are trying to do something different/not done before/charting a different path. I would advise all young people trying to start a business to go in with their eyes open, but also with dreams in their mind.
4. For women I would say- your job is even tougher- like it or not, the family looks at you to keep the home fires running-but the flip side is that you may not have to be the bread earner! Enjoy this freedom and do something that you truly want to do. This is not to say that your success is not important- it is just as important, but you may have the option to choose!
5. For women I would also say, that consider the logistics of your life as a serious matter - like how far is your office from home? How much support do you have (family and otherwise), good help at home!!! These are small, practical and according to me imperative tips for the women entrepreneur. I could never have run Craftsbridge, if these logistics were not in my favor.


Intrepid: Thank you so much for all the time and effort you put into answering this long list of questions! Would it be OK, if readers of this blog wanted to get in touch with you?

Shibani: Sure, they can email me at shibani@craftsbridge.com

Common errors in technical writing

Today I attended a session of the Mumbai chapter of the Society for Technical Communication . The first session was by Gurudutt Kamath, who is probably the most well-known figure in the tech writing community in India. My interest in attending the session arose cause someone I know was also speaking there, and also because a lot of the work that we do involves a significant amount of technical writing. So while, we may not be professional technical writers, consulting does require us to have excellent written communication skills.

Guru (as he is popularly known) was speaking on common errors in technical writing. I think many of these errors occur in daily business communication as well. He made it a pretty interactive session, so the other tech writers also piped in with the errors they have seen occur most often. Here's the list we came up with:

1. Not identifying the purpose of the document. Each document should have a set of objectives and a context in which it is being developed. Is it a user manual, or a marketing collateral, or something else. This leads us to:
2. Not identifying the right target audience. If you don't know whom you're writing for, you're quite likely to miss the mark in terms of getting your point across. You could come across writing increasingly dumbed-down documents, or your writing could be so filled with jargon that it would be impossible for the average reader to understand. Having identified the target audience, you need to be sure that the next error is taken care of:
3. Not getting the right sample audience to review your document. The right reviewers can make a huge difference in the final quality of your writing. I have often had non-technical editors review some pretty technical articles, and miss out on stuff that a more technical reviewer would easily have helped improve upon. Some of the better journals have a peer review system, so you ensure that a wider sample audience reviews your writing. A lot of the times, we end up submitting stuff without review - which is almost sacrilege!
4. Inconsistency. Whether it's your formatting styles or your use of numbering systems, or your choice of words (British English or American English or apna Indian English), you have to be consistent. This also applies to:
5. Not selecting the right examples. Guru gave the example of an article, which was about choosing relevant examples, and was woven around Amercian baseball. Now the author might have written the original article for an American audience, but by the time it got syndicated, it was published in other regions, where most of the baseball metaphors fell completely flat.
6. Common grammar and spelling mistakes. "It's" vs. "Its". Not pressing the F7 key. Enough said!
7. Wrong references. In larger documents, references to sections or figures within the document can go wrong when the document changes. For a book, that I was recently co-authoring, I had to keep changing the references to snapshots and figures as I kept inserting more, requiring me to renumber the earlier ones, as well as change references to them. Apparently, the right way to do it is to add a reference field, and point it to the location within the Word document, so that when the referenced section changes, the reference changes with it.
8. Cookie cutter nightmares. Ok, so we've all done this. Opened up a previous proposal or report, and simply pressed File Save As, and the old client name pops up in the most embarrassing places. We once failed to get a customer reference, because during the closing meeting they brought up the point that they had been put off because an old client name had cropped up in one of the documents we had submitted in the project. Based on the inputs from the other participants in the session, this happens to the best of them.
9. Use of cliched graphics. Using the MS supplied clip art in Powerpoint presentations, not getting the graphics done professionally, and using irrelevant graphics. Of course, Powerpoint gaffes are a whole thesis subject by themselves.
10. Punctuations errors. I am most guilty of these, especially with mis-placed commas. Just don't seem to get them in the right places! Other errors include inconsistent quotation marks, misplaces colons and semi-colons, the use of ;&amp instead of 'and', etc.

Guru recommended "The Elements of Style" as a good first book to get your technical writing in good shape. Others also recommended the "Microsoft Manual of Style" and the "Chicago Manual of Style". Guru also has a whole series of articles on common errors on this website.