Importance of cost-benefit analysis! #GreatMinds

Having embarked on your entrepreneurial journey – you must be very critical while spending money for an initial period of 2 to 3 years – irrespective of the fact that it is your own money or borrowed money. Even after 2 to 3 years when your business is well established and is running well, it is nice to remain financially alert, frugal, and prudent. I am not suggesting that you be a miser and/or have a narrow focus or short-term perspective of things. All I want to say is that you must always do the necessary cost-benefit (either a quick verbal check or a structured study) of any aspect, offer, or proposal before making any financial commitment. The application of the cost-benefit concept should not be limited to only fixed assets. It is a versatile concept and should be applied in all situations whenever and wherever a cost is involved. Always ask – what is my cost? and what benefit do I get?

Here’s what Thomas Sowell, an American economist and social theorist, has to say:


Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

A student of life for life

In my classroom, I always encourage that students develop a growth mindset. Even a student of business studies or entrepreneurship needs to have a perspective similar to a researcher. You must be wondering why?

What I mean is that we all must strive to be learners for life, always being curious and sceptical. Imagine that you are a scientist, and everything around you in life is your mega laboratory. As an inquisitive person, you keep conducting little experiments in your so-called laboratory.

What experiments, you may ask? Your experiments are learning opportunities in life that you pursue. It has a risk of failure. You intentionally put yourself in a position where you don’t know and are curious to learn over and over again. You can learn from people and from your circumstances in life. Even in unconventional situations where you meet someone who does not have the same background as you, be it an auto driver, a customer, a child… they all have the potential to become learning opportunities.

Keep learning, researching, discovering, and exploring…

In my own experiments in life, I have realised that there are three things that ensure our happiness. If you want to have faith in the future, live in the bliss of the present, and have gratitude for the past, these three are foundational principles you must abide by:



I have always questioned: Can’t we expand our definition of love beyond our near and dear ones, family members and close friends — to embrace all other creations of the Almighty like people from all walks of life including those we don’t know? This enlarged definition of love may also encompass all flora and fauna, and appreciation for various forms of knowledge, creative arts, music and sports etc. The statement I am making here may not be comprehensive to include all possible forms of love on this planet, but I hope you can deduce the significance of what I want to convey. I have learned that success, happiness, and life satisfaction comes to you in an abundant measure when you think about others rather than focusing upon YOU. Connect with others around you in life – add value to their lives, solve their problems, and make sure that they are happy/happier because of your efforts, initiatives, or contributions. While it is nice to be self-oriented – you must avoid being selfish. You must discover joy in helping people.


What you do to make a living takes up a major part of your life. In fact, this defines your professional ambition and ethics. Remember – you have every responsibility to make your professional life enriching and rewarding. You can solve any problem if you have the right kind of grit and determination. Do not be a victim of societal pressures – handle unpleasant circumstances with a calm mind. Do not react. Instead, provide a structured response to the triggers from the external environment. Your resolve will also become the fuel when you follow your passion conscientiously. Devote the best time of the day to do and accomplish what you love to do. This will make sure that your efforts will remain directed towards your end goals

3. HOPE.

Hope is being able to see that there is light despite all the darkness. Always maintain a positive mental attitude. You must have heard this proverb: “It is your attitude that decides your altitude.” I really believe that you must remain optimistic and always see the cup as half-full. When you are faced with the ups and downs of life, remember to even embrace and celebrate failures. I have said this before on this blog: Failures are stepping stones to eventual success. Failures provide us opportunities to learn from our past mistakes as also from the mistake of others. Do not be impressed by money, titles, appearances, social media, and degrees – instead be impressed by values like empathy, kindness, generosity, humility, integrity, and honesty.

With these three principles in mind, you will be able to both succeed and enjoy the journey of life. When you have love in your heart, a compelling professional ambition in your head and hope and positivity around you, you can make the most of everything on the way before you reach your destination!

Do not over-capitalize! #GreatMinds

Capitalize only to the extent necessary – overcapitalization may increase your borrowings and increase your interest burden. While ideally, you should have adequate capital with a healthy operating cushion (to take care of unforeseen factors) – temptation to overcapitalize and borrowing more should always be avoided. New entrepreneurs during the start-up phase can avoid buying land and constructing buildings – they can instead work from leased premises or factory sheds. Major plant, machinery, and equipment can also be leased out to save on initial capitalization costs. In the initial period, which may vary from a few months to 2-3 years, many entrepreneurs fail or are forced to exit from the business. Once the entrepreneur has crossed this vulnerable period of risk and uncertainty and the business has picked up, one can always do judicious planning to build own assets and terminate all lease arrangements. 

Here’s what Jim Breyer, an American venture capitalist, founder and CEO of Breyer Capital, has to say:


Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

Entrepreneurship- The key to success?

This article is based on a talk that I recently delivered at IBS, Mumbai at the request of the Entrepreneurship Cell of IBS. This was an online session of 60 minutes attended by the students of the college and several other guests.

The following is a short excerpt from the session I conducted.

Entrepreneurship is always a great career move.

If you are here this evening, it is probably because you want to be an entrepreneur, or because you want to take your entrepreneurial skills to the next level. Either way, you have made the right choice. 

Entrepreneurship will always be a massive field of unexplored opportunities. You can build a viable business around any one idea you believe has potential! 

As the session unfolds, we shall explore how do we enjoy the exciting journey of entrepreneurship together and witness the marriage of creativity with opportunity.

An entrepreneurial journey is full of excitement! You get to do what you love since you enjoy the business that you chose. You have passion and an obsession with the project. It is the thrill of converting an idea into a business model. This task requires your commitment and determination. If you approach it in this manner, you will experience this journey as a rollercoaster that provides an adventure every day. There is no stagnancy since every day brings new experiences. As an entrepreneur, you get to learn new things and apply your creativity to innovate in a dynamic industry. You are the boss and you make the rules for yourself and for others. You get to choose your team members as well as your clients/projects. 

So you might be wondering—How do I start? 

Start with creating or finding an idea. Then, develop your idea into a business model. The next step is to perfect this business model to the extent possible, and ensure that it is technically feasible, financially viable and economically desirable. Finally, ask yourself if your business is sustainable?

You can accomplish this

• As a full-time grassroots entrepreneur / an intrapreneur

• As a part-timer along with your existing job

• As a franchiser or franchisee

• As a Business Support Organization (BSO)

You may ask now: Sir, you tell me a great business idea so I will build from there!

My answer to this question is — “No business idea in the world will fit every aspiring entrepreneur’s dream. Your desire of starting a venture as an ambitious young entrepreneur depends on your individual circumstances and several external factors!”

You must exploit your own unique situations — your educational background, your unique skill sets, your years of experience, combined with clever financial management — to create an opportunity that best suits what you bring to the table.

In other words, make the best use of what you have, to achieve what you want to have!

Remember that your attitude, cultural background, value systems, and mindset are most important. 

Some entrepreneurs select their projects after a structured process of project identification. Still, others select their businesses on a random basis. Either of the approaches works if you truly believe in the idea. 

At this point, many people would wonder: “Alright, I have an idea but how do I get the money to execute it?”

In other words, 

How to fund your project?

You can fund your project from your own equity as well as equity contributions from your family, friends, relatives, and associates. You can also bring in quasi-equity. Apart from equity, you can also raise term loans from various banks and DFIs. 

Other sources to fund your business/project include angel investors, venture capitalists, ICDs, Crowdfunding and others. 

I particularly emphasize three sources from where entrepreneurs can raise funds during the start-up phase. These are bootstrapping, getting equity support from your college batchmates, and approaching a few important stakeholders like the suppliers of machinery and raw materials to lend you equity support. In fact, I got to know about these pearls of wisdom when I attended an international seminar a few years back in Mumbai. The seminar was graced by many famous serial entrepreneurs who were sharing their personal experiences with the attendees.

Here are a few important tips for the entrepreneurs for their start-up success.

During the project execution stage, there are three important aspects that you as an entrepreneur must keep in mind. The first aspect is that you must keep your timeline in control and no activity howsoever important should be allowed to exceed the completion time allotted to it. Remember that any slippage on the timeline will lead to additional costs. The second aspect relates to your project cost. Ensure that there is no escalation in the project cost come what may. The project cost must be contained within the budgeted figure and the entire project team must be sensitized on this aspect. The third aspect relates to the scope of the project. Under no circumstances, you should agree to any change/s in the scope of the project as this may over-capitalize your project. We all know that over-capitalization is a bad thing and creates a lot of trouble for you later.

During the operations phase of the project (what we also refer to as normal business operations), we must try to achieve the well-known five performance objectives. These are cost, quality, speed, dependability and flexibility. Let me explain. You must keep your cost of production in check so that you remain competitive in the market. You must also offer high-quality goods and services to your customers. Apart from these two objectives, try to improve upon the speed of delivery; meaning, you must cut on the lead time of your customers. The last two objectives relate to dependability and flexibility. By this, I mean that you must try to satisfy your customers on all possible dimensions, and ensure that you remain a dependable supplier to them.

Many entrepreneurs out of their sheer enthusiasm tend to borrow huge sums of money from banks and DFIs right during the start-up phase. I generally advise entrepreneurs who come to me to not follow this practice. In my opinion, an entrepreneur should build their business module by module and enhance their borrowings only in that proportion. Once you, as an entrepreneur, have mastered the art and science of handling money, and making money from money, you can always step up your borrowings.

My next tip is about choosing your co-promoters and business partners. Here, you must remember that anyone who is a good friend may not necessarily be a good business partner. Many such friends join your start-up with an investor mindset, meaning that they remain sitting at the fence all the time. If the venture succeeds, they’re more than happy or else, they console themselves that it was a bad investment for them. An ideal co-promoter/partner will share your vision for the business and will remain with you through thick and thin.

Apart from the above suggestions, I would like to point out that entrepreneurs during their start-up journey should also pay special heed to certain critical aspects like effective management of the working capital, ensuring adequate liquidity by maintaining the current ratio always above 1, striving their best to create, communicate and deliver value to all their stakeholders, and finally using their network to advantage.

Last but not the least, I urge that you must find a mentor. Entrepreneurship can be a lonely and confusing journey, especially at the start. A mentor can be a friend, philosopher, and guide to you at every stage in your professional as well as your personal life. A mentor, who has professional experience in the field, insulates you from failure. A good mentor is one who has already traversed the path that you are now embarking on! 

Conquer your goals bit by bit #GreatMinds

Many times in life, we are confronted with huge, important tasks that require our attention. Daunted by the challenge, we procrastinate. We don’t know how to begin to tackle them. At this point, a good productivity tip to follow is — break down your larger goal or project into small, achievable microtasks. You can even break them down by limiting the time you work on it, say, 20 minutes per task. My friend Jyoti Nair sent me an excellent graphic representing this technique.

This practice not only helps you prioritize but also helps you track your progress. You feel less stressed, and more accomplished after each microtask that you check off from the list.

Here’s what Mark Twain, American writer and humorist, has to say,


Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

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