An Entrepreneur’s Tale of Loss, Provident Fund and Lessons Learnt

I recently met a senior executive with a MNC who was contemplating leaving to either start his own company or join a startup. He has over 25years experience, is a respected and recognized technologist with several published articles and books to his credit; he has built several solid technical teams in his various avatars through the years. He had also started his own technology company about 10years ago. The company had to shut down after 2.5 yrs. “I took the decision to shut down the company after a meeting with an official of the Provident Fund authority.

what makes a successful entrepreneur?
what makes a successful entrepreneur?

The company had not remitted PF on account of its employees though it was making some revenues. I was using cash-inflows to part pay salaries to employees that took care of the immediate situation than to worry about a future pay-out like PF. These employees had been with me at little or no salary for close to 18 months and I just couldn’t let that situation continue.

However, the official made me aware of the serious consequences of this lapse (which included my going to jail!) and was advised to somehow find the money, square off the PF account and then proceed to shut down the company. I was in a state of shock”.“The company owed money to lot of people and I was personally in debt. It was a very hard decision for me but I managed to find the Rs 2 lakhs required for the PF payments and then proceeded to shut down the company. It was a terrible experience”.

“I should have taken the $500K that a VC, who knew and respected me, had offered in the early days of my company. My business partner advised me against taking the money as he hadn’t had a happy experience with this VC. I depended a lot on my partner who I’d brought in to help me with the business end of the company – sales, finance, marketing, partnerships. I was a technical guy and didn’t want to deal or feel comfortable with business issues. Over time, I realized that my partner wasn’t able to contribute in real operating terms and was more of an advisor”.

“I had raised money from some angels. During the shutting down process, I went to them and asked them for their feedback. They told me that I had to learn business and as the founder-CEO couldn’t outsource it to someone else. While at an MNC, I had beenexposed to finance and business, it had never been my direct responsibility as there were always others who would do it for me.Here I had to roll up my sleeves, understand, execute, monitor and measure performance and the plan myself. After all, it was mycompany!My business partner then started pressurizing me for making good on the loans that he had helped arrange.
The angel investors told me that he had to stand in line like everybody else and, in fact, as a director on the board of the company he should be at the end of the line! One of the angels wrote me an additional cheque to help me tide over the closing expenses on the condition that I do not disclose the matter to his wife!”

“Anyway, I learnt who my friends were during this process. My wife stood solidly by me during this entire saga. I didn’t go back to the VC as I felt bad for having rejected his offer. In hindsight, the VC would’ve made a difference. There would’ve been a lot morediscipline, more focus on business and on the model. Anyway”.“I then joined another MNC and used my entire first month’s salary to pay off the angel who’d written me the cheque.
I attended finance classes, invested in the stock market and made some money. This also helped me pay off some of my personal loans”.“I’m free of all debt now. I advise a few startups on technology and on helping them shape their product from a market standpoint.I’ve learnt that technology without a market context and an efficient delivery and support mechanism is worthless; I believethat the experience has made me emerge as a much stronger and better person”.

“I’m now ready for a startup!”

I’m sure there are many of us with similar experiences. The learnings of this entrepreneur should resonate within all of us. What do you think?

Guest article by Sanjay Anandaram, a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. The views expressed here are his own. Article republished post author’s approval.

Also Read: Why you should not be an Entrepreneur [And why I am still an Entrepreneur!]

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