[Editorial Notes: Entrepreneurship is a lot about learning from other’s mistakes and making some of your own. In this guest post, Vinamra Pandiya of Tastykhana talks about a few lessons he’s learned from his entrepreneurial journey; and shares his perspectives.]
In my last article (Starting Up? Avoid These Mistakes : Death by Stealth, GaaS), I had covered 8 things to avoid before you start walking the path of entrepreneurship. This article would focus on practical advise (and avoiding the usual gyaan) during the first year of being an entrepreneur.
1. Legal before Real: I have seen a lot of startup founders use their personal bank account to do business transactions. While it may be simpler and faster, it is better to form a legal entity right from day one.
2. Use Savings, not your Savings Account: When I started my first business along with my partner, we were guilty of booking business expenses through our own savings accounts. Do not commit this mistake. Simply plough all the money in your company’s current account which would be your initial paid up capital. Now, spend whatever and howsoever you want on your business.
3. Remember, this money is of the company, not yours: Another mistake early start-uppers make is borrow whatever sustenance money is required for their personal requirement from the company’s account. While your head above the water is certainly required, you either fix your personal expense and take it as a monthly salary or keep some parking money for yourself in your savings account.
In short, do not take money randomly from your company’s account even though you may credit it back after some time. It is plain bad economics, avoid it.
4. Do not Avoid Tax during Taxing Times: Demographics show that a large chunk of entrepreneurs are not number friendly and certainly not tax friendly which proves to be their Achilles heel later. Make sure all your personal tax returns are filed so that your credit worthiness is intact and if required, you can take fresh loan for your growing business.
If your business is into product manufacturing, make sure you apply for various Tax Nos (PAN,VAT, TIN, TAN etc). All your PO’s and Invoices should have those nos. If you are a services company, make sure you apply for a ST (Service Tax) No and ensure you file them as per the regulatory guidelines.
5. Be in Good Books & Maintain Good Books: If you are in a business which will require funding later, make sure all your accounting is in place. Even though you have all the right intentions, a prospective investor would also look at your accounting books and would believe it more than your mere words.
Prepare your annual P&L’s and audit your balance sheet from a competent CA. These best practices would make your company much more investor friendly apart from the usual ingredients of dedication & execution.
6. Cash is King but deal in Cheques: Another temptation we Indians tend to have is our relative propensity towards cash transactions. While this works in a kirana shop, it certainly should be a strict No-No for all your expenses and earnings. Your vendors may ask you to accept money in cash so that they avoid paying tax and you actually pay less.
While, this may seem tempting, don’t fall for this. Ask for proper bills and pay either in cheques or NEFT. Similarly, take all receivables also in the similar format. You are anyways occupied by your daily business challenges, so don’t complicate things here.
7. Have a Sheet Anchor, It helps: During your first year of starting up, world can be really cruel. Your family thinks you have gone nuts, your friends think you are a jackass. In these tough times, you have to be emotionally stable to work with full passion and purpose.
We all are humans and we need that little space on a small boat when we are fighting against rough tides. I had the fortune of having my then girlfriend (now my wife) and my parents as a support rock. If you don’t have, find one sheet anchor as you will need him/her during your start up days.
8. Use LinkedIn to get In: I had got my first set of customers through my connections on LinkedIn and I will forever be indebted to this network for helping me in my initial start up days. Now, when people connect me through LinkedIn asking for advise/mentorship, I don’t hesitate to help them.
9. Ego to Zero, Money is Honey: If you need some pertinent gyaan, it is this. Business is always done with folded hands howsoever big and famous you become. Since it is business, your love for money (in a positive way) should always be intact. This love will always help you to take good financial decisions and put profits at the centre.
You need oodles of passion, a gang of paagal people and a pure purpose to increase your probability of success in your venture. I can’t predict the result, but it would certainly make you a good human being above everything else. Amen!
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