The great global bonfire that is capitalism, which provides much needed light and heat in an otherwise cold and dark world, in the form of money supply and trade requires entrepreneurship as its fuel. Entrepreneurship can be farmed from the human mind in regular consistent supply so long as the geopolitical climate is conducive to new ideas. For capitalism to work, entrepreneurship has to flourish. Therefore, that society which can harness the human capacity for entrepreneurship will fuel the largest bonfire, and thereby in turn will lighten the world in its own image. For a Dharmic capitalism, we will require a steady stream of Dharmic entrepreneurs

Entrepreneurship is not easy. Indeed, one can argue that entrepreneurship is epitomised by risk. Failure lurks at every corner. There are no set maps for success. The landscape is in constant flux, and the variables are often in the hands of the ‘devas’. With this risk, can come great reward, but all too often many entrepreneurs struggle for decades before accumulating any significant wealth, and in many cases all their sacrifice results in a fledgling flame at best, or downright disaster at worst.

Many have been traversing this fluid, dynamic road of entrepreneurship, and there are certainly ‘rules of thumb’ that people can espouse. These rules can help us navigate through uncertainty, allow us to seek support when we need it most, and to learn the right things at the right time, and quickly enough to get over obstacles.

#Rule 1 : Ideas are easy. But can you prove them?
The human psyche suffers from an egocentric bias. This bias in many ways has come from our
evolutionary past, the ability to take risks, has always been part of what it means to be human. To hunt, to fight, or even to protect requires a certain amount of overcompensation in our ability to feel as if we ‘know’. To know breeds confidence, and confidence is the hallmark of the risk taker. The risk taker knows he can succeed and she has a rationale for why they will succeed; but the truth often is that they are relying on an over-simplistic model, while over estimating their own ability, and under estimating the variables that can turn against them, on which they have no control. This is the egocentric bias. The entrepreneur has to overcome this bias by testing her idea.

#Rule 2 : Knowing that you don’t know
To test an idea, the entrepreneur has to extract it out of her mind, and communicate it to another. That other must prove test it. The entrepreneur must build a network of well-wishers around the idea; people who know things that you certainly do not; the idea must pass someone who understands bank finance and debt; someone who understands the regulatory framework surrounding one’s idea; someone who has direct experience in that market place; someone who understands risk capital and how to raise it; and so on. Only when these well-wishers all begin to believe in the idea as equally as you do, can you begin to trust your instinct that your idea is a good one.

#Rule 3 : Identify the skills you don’t have and attract talent around you
People surrounding the entrepreneur must be better skilled with more experience than the entrepreneur. Too many entrepreneurs lack the ability to recognise their own lack of skills and experience, and often attract people who will only exacerbate the entrepreneur’s egocentric bias. To attract talent requires charisma, confidence, and the ability to reward those who help you when risk is at its highest. Essentially, their experience ought to help the entrepreneur develop an abstract idea to a full fledge business plan, which is costed and modelled by people who will add credibility. Experience always mitigates risk.

#Rule 4 : Proving the idea and raising seed capital
Once the business plan is complete and the financial models stress tested, it’s time to prove the
idea. Raising seed capital is always expensive either as payback, or more likely in equity – accept it. Seed capital of course can be one’s own savings or financed by the ‘bank of mum and dad’ if one is lucky enough. The KPIs for any start-up will always be around managing cash flow, profitability, debt leverage, and the overall market conditions in which it operates. Often entrepreneurs begin to realise at this stage that the idea in practice and the idea in the business plan are two different things. This is where assumptions are tested, and often reconfigured. At this phase the entrepreneur cannot be attached to her abstraction, she must adapt to circumstance. The business plan will always be in a state of flux, and change. Narratives, and emphasis will continue to evolve. Ultimately proving an idea can take anything as little as 6 months to 5 years pending on the idea.

#Rule 5 : Raising capital for real growth
Capital. Capital. Capital. And what cost? This is where an idea has matured, been tested, is surrounded by experienced individuals, and the business can show real cash flow, profitability, and debt serviceability. The next big challenge is raising the capital for rapid expansion and taking opportunity of market conditions. There are two core ways in which capital can be raised – through debt or equity finance. Debt requires serviceability, and equity requires profitability as well as marketability for a planned exit in year 3, 4 or 5. Entrepreneurs often fail to recognise the severity if they get the financing wrong; the business can be taken off their hands or ends up working for the debt provider instead of the shareholders. If however, finance is acquired, then the deployment of capital is the next uncertainty to overcome. Ineffective deployment can lead to poor returns adding incremental pressure to get the next decision right. However, if deployment is done through consensus across the team, then the entrepreneur has the greatest chance of creating wealth for herself and for those who have bought into the idea.

An entrepreneur will face challenges from all sides, and most of the time they would not have been foreseen. The entrepreneur has to develop a certain mind-set, a psychology if you will; one that is forever elastic, adaptable, and cooperative on the whole with a competitive edge; confident but aware of skills she lacks and the experience she requires. Patience is another quality that is often underrated. The ability to inspire others, especially during the formative years of any business, to attract those that are more experienced and to manage their egos is key for any leader.

The journey is what the entrepreneur lives for, and the end for wealth or poverty is the price one pays for risk taking.

By – Sachin Nanda

Sachin Nanda born in Bharat; raised and educated in the United Kingdom. Sachin is the Founding Partner and Chief Strategy Officer of a Private Equity backed company operating in British healthcare. Sachin has a degree in Aerospace Engineering, a post graduate diploma in Christian & Islamic Theology, MA in Philosophy and his post graduate thesis in Political Philosophy, with a special focus on liberalism.