Entrepreneur June 2011

JUNE 2011  VOLUME 2  ISSUE 10  Rs 100

ABHIRAM SETH quit his job at Pepsi to grow seaweed in Madurai

SPECIAL INSIDE INDIA’S BEST BUSINESS HOTELS

CASHING IN

ON CROPS Make your fortune from agriculture

Top Business Opportunities Steps to Get Necessary Licenses Identify Export Markets Benefits of Contract Farming ALSO: How to Start a Logistics Company How to Set Up a Cold Storage Chain How to Be Your Own Boss How to Incorporate a Company

table of contents 20

INSIGHTS 17 SYSTEMATIC INNOVATION IS THE

NEW TREND Robert Trucker on why the field of innovation is going through a radical change in our times thanks to new tools of engagement.

18 STARTING A FINANCIAL PLANNING PRACTICE Ranjeet S. Mudholkar on focus and preparation required to set up a successful financial planning practice in India

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FROM FARM TO FORK

30 FARMING BILLIONS

Do you realize the growth potential that India’s largest economic sector — agriculture— holds? If yes, here are a few business opportunities that can help you make billions and in the process help revive the fortunes of India's farmers.

40 REGULATORY HURDLES NOW EASY TO OVERCOME As the standard bar for export from India goes up to match the international one, a genuine and uncompromising-on-quality business can help you overcome the regulatory hurdles easily.

By Team Entrepreneur

By Pranbihanga Borpuzari

36 SULTAN OF SEA

43 FARM OUTSOURCING GAINS MOMENTUM

Abhiram Seth inked a new future for the farmers of Tamil Nadu by providing them suitable vocation and, in the process, started India’s first and still the only company that promotes sea algae cultivation.

By Shonali Advani

38 BHARTI WALMART-WORKING WITH FARMERS

44 EXPORTING AGRICULTURE

By Pranbihanga Borpuzari

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CUSTOMERS Nandini Vaidyanathan on why you can’t be complacent with your clients.

IN CONVERSATION 26 'WE NEED RS. 1 LAKH CRORE TO SKILL 500 MILLION INDIANS.’ National Skill Development Corporation calls for public-private partnerships to fill the gap in skill training for manpower across sectors in India.

By Pranbihanga Borpuzari

The beer division of the UB Group exploits the concept of contract farming to get the best raw material for brewing and to benefit agri-entrepreneurs.

By Pranbihanga Borpuzari

As the 50:50 joint venture of Bharti Walmart enters its fourth year, MD and CEO Raj Jain talks about the retail chain industry and how the demand & supply factors led to agri-entrepreneurship.

20 PROPOSE TO YOUR PROSPECTIVE

Thinking global? A few words on what India sells overseas and to whom, and what changes are required to boost the export of these commodities.

By Pranbihanga Borpuzari

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YOUNG TURKS 56 TOP GUNS India’s longest-running television show on entrepreneurship takes a look at two young entrepreneurs who are going to change the business horizon.

By Team Young Turks

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CHECK IN 62 INDIA’S BEST BUSINESS HOTELS How the buzzwords of sustainability and corporate responsibility fit into the dynamics of decades to come.

By Sriya Ray Chaudhuri

SUCCESS INC.

92 FROM SILICON TO SIFY Raju Vegesna has climbed the success ladder from small-town boy to a large-scale investor in Sify, stopping by Silicon Valley in between.

By Shonali Advani

STRATEGY 102

96 MAKE THE MOST OF ‘CONTACT US’ TO GATHER LEADS You heard it hear first. Listing your contact information on your website is just not enough.

By Khoa Bui 98 DOES YOUR MISSION STATEMENT STINK? Steer clear of these 5 common mistakes and you'll be on the path to creating a statement that defines your business.

By Susan Gunelius 100 MUSIC CRITIC You heard it hear first. Listing your contact information on your website is just not enough.

By Gwen Moran 102 THE NEW CREATIVE CLASS The big idea to move your companyto the next level can happen if you put in the work—and play while you're at it.

By Joe Robinson

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104 CALL OF THE WILD Wildcraft has scaled new heights in niche segment on the back of its conscious strategy to stay focused on the core of its business—the outdoors.

By Shonali Advani

MONEY DEPARTMENT 114 THREE COMMON CCOUNTING MISTAKE Expert advice and lessons learnt from financial missteps of small-business owners.

By Dan O’Shea 116 THE BUSINESS OF BETTER BENEFITS A HR honcho offers expert insight on small-business benefits challenges.

By Gwen Moran

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table of contents 119

52

‘HOW TO’ STARTUPS

48 Start a Logistics Company

119 INDIAN HANDICRAFTS GO ONLINE

50 Set up a Cold Storage Chain

Sudip Dutta quit his career in IT and switched to the handicrafts industry to create social impact through his venture aporv.

By Shonali Advani

124

52 Be your Own Boss 54 Legally Incorporate a Company

TECH DEPARTMENT 107 KICKING IT TO THE CURB

When is the right time for an entrepreneurial business to outsource IT management to a remote provider?

By Dan O’Shear

108 BACK WITH A BANG Windows Phone 7 is a mobile OS par excellence. And the HD7 is making it look even better.

By Ankush Chibber

113 MAC IN SIGHT A guide to boosting the video collaboration aptitude of your Apple devices.

By Jonathan Blum

SPEND IT

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124 A RIOT FOR YOUR PLATE

Republic of Noodles has brought street food of South East Asia into a formal dining set-up.

By Sriya Ray Chaudhuri

111 PHONE BOOKING A new mobile app helps the manager of an upstart New York City hotel fill empty rooms with travelers on the fly.

By Dan O’Shea

126 PURE BLISS

Enter Quan Spa at the Pune Marriott Hotel and Convention Centre, and come out refreshed and rejuvenated

By Sriya Ray Chaudhuri

ONLINE IDEAS

REGULARS 10 FEEDBACK 11 RESOURCES 12 SME DOCTOR 16 STUMPSPEAK 130 BACKSTAGE 8 Entrepreneur + June 2011

COVER IMAGE

A K PERUMAL COVER DESIGN

ARKO PROVO MUKHERJEE

129 A QUEST FOR BALANCE Offering an optimal blend of text, graphics and white space will keep your visitors clicking.

By Mikal E. Belicove

cover story

With the economy gathering momentum and the retail sector booming, demand for farm products is on a rise. This is the right time to be in the sector. Turn the pages to know all about it, from opportunities to legal aspects.

Entrepreneur + June 2011 29

cover story

FARMING Here are the sectors that can help you churn billions from farming – a new entrepreneurial opportunity that has bloomed in India recently.

By Team Entrepreneur

FARM EQUIPMENT BROKER

MARKET

Do you know the in and out of tractors? If so, you have a chance to make fortunes as a farm equipment broker.

Farmers who want to lease farming equipment.

BUSINESS AT A GLANCE

If you have an eye for special plants, this is the market to be in.

HERB FARMING

STARTUP COST: Rs.4 lakh to Rs.8 lakh HOME BASED: One can work from home PART TIME: One can take it up as a part-time job FRANCHISES AVAILABLE: No ONLINE OPERATION: No

BUSINESS OVERVIEW International connections can really pay off, especially if you’re planning to start a farm equipment brokerage business. Your international connection will not only assist in marketing equipment overseas but also in locating discounted farm equipment for Indian buyers. The market for quality farm equipment such as tractors and hay combines is huge worldwide. Selling just a piece of equipment per week can generate business revenue of about Rs 1 crore per year, or more. The key to success in this business is to build and maintain vital contacts and alliances with farm equipment dealers and brokers and to seek international opportunities with booming economies. The investment that goes into the business varies based on factors such as initial advertising, business location and overall operating expenses. One way to minimize startup cost is to operate the business from a homebased office and market only local farm equipment to local potential buyers. As a rule of thumb, a farm equipment broker takes 10 percent of the total value of the farm equipment sold as commission. There are, however, exceptions to the rule. The commission rate will often be over 10% on low-value farm equipment and less than 10% on expensive farm equipment. Keep in mind that even if a piece of equipment isn’t sold, the broker is responsible for the cost associated with attempting to market the equipment, unless a prior agreement has been established with the equipment owner. This is a rare practice.

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BUSINESS AT A GLANCE STARTUP COST: Rs.1 lakh to Rs.5 lakh HOME BASED: One can work from home PART TIME: One can take it up as a part-time job FRANCHISES AVAILABLE: No ONLINE OPERATION: Yes

BUSINESS OVERVIEW Herbs are extremely popular these days. From the smallest shop to the largest discount warehouse, one can find medicinal herbs, culinary herbs, herbal teas, baths, candles and aromatherapy essences. If you love the romance and mystique of herbs and like gardening, herb farm is just the right choice for you. You have a wide range to do business in. You can sell your herbs in wholesale market or to retail customers. Container plants or

BILLIONS herbal products like soaps or vinegars can also be sold. Some herb farmers operate pick-your-own fields where customers can chose what they want. The business is about you and mother nature and follows the stick-to-basics principle. It also serves as a tonic for body and soul. The main advantage of the business is that you can start right at home in your backyard or rent an inexpensive land. However, keep in mind that your profits will also be small, unless you have two-digit acreage. Having larger area under cultivation means you’ll need to know farming techniques cold. Also, you need to have a strong knowledge of how to grow and nurture herbs. You’ll also need a firm grounding in the wholesale herb business — what’s popular, who’s buying it, why, which herbs are best to do business and which new herbs are likely to be the ‘in’ product in the next few years as it can take up to two years to reap the benefits of your labor. Besides, you’ll need top-notch sales and marketing skills to get your herbs in the marketplace and keep them there.

NEEDED EQUIPMENT

First and foremost, you’ll need a farm. If you have the land, half the battle is won. You can rent a piece of land at a low price — try power companies with fallow land beneath their towers or property owners who have unused acres in rural areas of your town. A word of caution: wholesale buyers of natural products may want your farm is on a certified organic land — one on which nothing was grown using pesticides, herbicides or fertilizers. Depending on the state where you are starting business, state agency or a private organization can provide the certification. Next, you’ll need seeds and growing supplies. If you have your farm in a coldweather locale, you may have to invest in a greenhouse. You’ll also need a truck or van to deliver your produce to customers.

FLEA MARKET ORGANIZER Introduce great deals to masses by organizing a flea market.

BUSINESS AT A GLANCE THE MARKET Your customers can be wholesale distributors buying for health product manufacturers, grocery chains and restaurants or you can be selling directly to manufacturers, grocery chains and restaurants. You can target other SOHOs — artisans and crafters who work with herbs, caterers, health and skin care products manufacturers and natural food stores. You can sell potted plants to garden centers, florists and nurseries. You can put your herbs directly in the public’s hands by selling at farmers markets and flea markets. Your best bet for selling to other businesses is to mark your niche in the untapped area of the market so that there is no competition. If you want to try the wholesale route, contact distributors (can be located via herb and specialty food organizations). To sell directly to SOHOs, take samples of your herbs to them and ask for business. For farmers and flea markets, contact the market organizer to find out about fee and make space reservations — display space at some flea market can be very competitive. So don’t wait until the last minute to make arrangements.

If you plan a pick-it-yourself operation, advertise in local papers and put up sign boards on roads that lead to your farm. However, don’t forget to get the permission of your land owner and local zoning authorities.

Photos© Shamik Banerjee & Neha Mithbawker

STARTUP COST: Rs.5 lakh to Rs.10 lakh HOME BASED: One can work from home PART TIME: One can take it up as a part-time job FRANCHISES AVAILABLE: No ONLINE OPERATION: No

BUSINESS OVERVIEW Flea markets are a multibillion-dollar business in the United States, and here is your opportunity to cash in on the boom by becoming a weekend flea market organizer and manager. Get started by renting a commercial space in a frequented area.

The space should be large enough to be sectioned into smaller vendor booths of 10-by-10, 10-by-20 and 20-by-20. During summers, and if the space permits, extra revenue can be earned by renting vendor stalls. Rents vary depending on factors such as booth size, location, equipment and hours of operation. When booking vendors, try for a wide variety of products — antiques, electronics, kitchenware, food items, clothing, tools, toys, art and sporting goods — to be offered for sale. Doing so can target wider spectrum of flea market shoppers. Additional revenue can be earned by charging a gate fee, parking fee, having an onsite ATM, renting equipment and providing shoppers with delivery services for large items. However, be careful not to get too caught

To read more, grab the June issue of Entrepreneur Entrepreneur + June 2011 To Subscribe, visit www.entrepreneurindia.in

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young turks

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TOP GUNS Young Turks, India’s longest-running television show on entrepreneurship, has completed a decade.

Here is a look at two young entrepreneurs who made a difference in the last 10 years and who are going to change the business horizon.

IllustrationŠ Chaitanya Surpur

To read more, grab the June issue of Entrepreneur Entrepreneur + June 2011 To Subscribe, visit www.entrepreneurindia.in

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young turks [Buzz]

Retail Tale Gets a Twist

Manu Agarwal is giving traditional retail a run for its money with his venture Naaptol.

By Team Young Turks

B

etting big on tier II and tier III retail markets, Agarwal caters to over 4,000 customers daily, retailing more than 2 lakh products over 500 brands. After weighing the pros and cons of starting up an e-commerce business, Agarwal decided to launch Naaptol. com in 2008. A home shopping venture, Naaptol connects buyers and sellers online, through print and TV ads and the mobile phone.

This virtual marketplace is buzzing today, but Agarwal admits that he did not get it right the first time. Originally launched as a price comparison engine for electronic products and gadgets, Agarwal soon realized the big bucks lie not just in telling audiences where to get the best deals but bringing them to the platform and helping them transact online!

“We’ve become what Google is like in the product search area. However, Google has a

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way to monetize its visitors which is through Ad Words, so we had to discover our own Ad Words, which we realized was via ‘Hot Deals’.

We thought that if people are visiting the site, looking for a mobile phone and we have a great deal on a mobile phone which you showcase to them, then there is a reasonable probability that they would buy it. So, that’s how the Hot Deals concept started,” explains Agarwal.

His company was one of the early e-commerce businesses in the country but today the space is quite congested. Agarwal starts off by saying: “I don’t like to use that word e-commerce. We are more of a virtual shopping or a home shopping business. We reach out to consumers on Hot Deals through different mediums like print publications. Today, there are over 50 print publications which we work with. We are there on multiple TV channels, onto their commercial airtimes where we again publicize our Hot Deals. We’re there on the internet; we’re there on our mobile applications.”

As a home shopping venture, Agarwal’s venture has been able to achieve good traction.

It consistently does about 5,000 transactions a day, thereby becoming the largest home shopping player in India. Almost 60 percent of his business comes from reaching out to consumers through print ads, 30 percent from TV ads and about 10 percent comes from the digital space.

But how has he been able to convince the Indian consumer to buy right out of home or online? “Virtual shopping today is not only

about convenience. It is largely to do with availability. India is a big geography, so as you go beyond tier II and tier III cities, many products are just not available. If you are able to service a customer remotely and he’s able to reach out remotely to you to place and order a product, that is his key demand,” explains Agarwal.

He goes on to add: “There is some apprehension. However, when a consumer calls us up, the agent spends quite a bit of time with that customer to take him through his questions and make sure that we answer all of them for him to be able to take a purchase decision.”

With more than 60 percent e-mail transactions in India done over the phone, Agarwal has set up four call centers with 650 employees to facilitate transactions on the Naaptol platform.

Reaching out to more than 3,000 cities across the country, Naaptol today powers over 4,000 sales everyday; grossing revenues of Rs.1.5 crore. But with products on its portal often unbranded, convincing the Indian consumer about value-for-money has not been easy.

While researching for Naaptol, Young Turks found that every fifth link led to an aggrieved customer. “We run a 100-member cell only to make sure that any customer who has a complaint can report it back to us. Our logistics partner can pick up the goods. We have a warehouse only for reverse logistics. We don’t have a warehouse for dispatch, for which we use supply warehouses. So, it comes to our reverse logistics warehouse where we can decide how a refund needs to be given or a replacement needs to be given,” explains Agarwal.

Coming to revenue figures, Agarwal says he moves parcels worth about Rs.1.5 crore everyday. A lot of growth is coming from the TV area.

And, depending on the category, the margin on his sector is between 15 percent to 30 percent.

In terms of a ballpark, he is looking at expanding at least three times in the coming 12 months. Agarwal also wants to launch a private

sales section on the website and eventually a home shop TV channel.

Raising its first round of funding from Canaan Partners in 2010, Agarwal is looking to consolidate his business and is investing in essential elements like payment gateways, logistics and warehousing.

Along the way, Agarwal has faced and overcome a number of challenges. Does he feel that e-commerce in India has created enough traction to compete with traditional retails or traditional shopping? “Traditional retail is close to Rs.22.5 lakh crore. E-commerce, if you leave the travel apart, is probably less than Rs.4,500 crore.

So, the two are a long way apart. E-commerce or virtual commerce have the advantage of being able to go to every corner of the country. So I see traditional retail succeeding in near term in the larger cities. However, as you go to tier II cities and beyond, virtual retail will have an edge,” explains Agarwal.

Talking about future plans, the young entrepreneur says, “Even at our current level we are a small speck in the retail world. So, to grow from here 10 times will not be a challenge at all. I’m looking at doing 50,000 transactions a day in the next couple of years, which will really give traditional retail a run for its money.”

And is he looking at a second round of funding now? “Not actively looking but we have been in discussions with a few players,” he explains.

Agarwal, who has been a serial entrepreneur before, had launched Design Expo in 1998, in 2003 he had launched ANM Soft which was a software company, and in 2008 Naaptol. So, is he again at the cusp of another big opportunity? “No. Many people tell me that you have got lucky the third time. I had not really succeeded in my past two attempts, though the ventures were reasonably successful. But Naaptol is the big idea I’m working on. Everyday when I see what we’re doing and how much we can grow, it actually gives me goosebumps,” he signs off.

To read more, grab the June issue of Entrepreneur Entrepreneur + June 2011 To Subscribe, visit www.entrepreneurindia.in

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INDIA’S BEST BUSINESS HOTELS

check in

62 Entrepreneur + June 2011

SPECIAL INDIA’S BEST BUSINESS HOTELS

Entrepreneur checks out some of the hottest and most preferred hotels for the business traveler across 12 Indian cities. Most of these cities have a wide range and variety to choose from when it comes to hotels. We have compiled for you a selection only; with a host of informative data which will help you choose your accommodation more easily. For some of the metros, the list may seem too little, because to mention even half the options would fill an entire magazine. This list, therefore, comprises our recommendations only.

So, next time you fly to Bengaluru or Hyderabad, Coimbatore or Guwahati, this ready reckoner will make your task of selecting a hotel a little bit simpler.

By Sriya Ray Chaudhuri

To read more, grab the June issue of Entrepreneur Entrepreneur + June 2011 To Subscribe, visit www.entrepreneurindia.in

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success inc [Techno-Guru]

“I

FROM SILICON TO SIFY

’m not different from any other human being,” says Raju Vegesna, CEO and Managing Director, Sify Technologies Limited. However, one can debate that. In a world full of money and power-hungry people, it’s quite unusual to find people chasing knowledge, not just by securing recognized, reputed qualifications, but propelled by a desire to learn and know more, to dig deep into the crux of the

92 Entrepreneur + June 2011

Silicon Valley entrepreneur Raju Vegesna has climbed the success ladder from smalltown boy to a largescale investor in Sify.

By Shonali Advani

things. The dictionary defines such people as autodidacts, and Raju Vegesna can safely be called one.

EARLY LIFE Hailing from a small village in a coastal district of Andhra Pradesh, Vegesna comes from an agricultural family that owned 10 acres of land, and the cultivation of paddy put bread and butter on the table. Despite being

PAGE VIEWS & TRAFFIC OF SIFY.COM decently well-off, he chose to work on the farm with other farmers as he empathized with their difficulties. “I’ve always maintained that one shouldn’t take anything for granted,” he says. Luckily for him, his family helped him secure basic education up to Xth standard, after which he went to a bigger town, 14 miles from home, for higher studies. Pretty much at this time Vegesna was engulfed by a determination to get a degree in electronics. His curiosity with the subject had, in many instances, led him to open television sets only because he wanted to understand how broadcast medium worked.

Perhaps one could say that these were initial signs of the years to come. Post graduation from Bengaluru University with his much-dreamed about degree in electronics, Vegesna tread the obvious path, and headed off to the United States to pursue a Master’s Degree in computer engineering at Wayne State University, Detroit, with a scholarship. “The Indian education system at that time, and even today, is not very relevant to work we do,” he mentions.

LIFE IN THE U.S. Once in the U.S., there was no looking back. A superior education system and technological advancement gave Vegesna the opportunity to learn things about computers he wouldn’t have learnt if in India. “I was like a kid in a candy shop,” he laughs. Not ready to sit still, he took on teaching assistance while pursuing his masters. “Teaching in the U.S. cleans up your fundamentals, especially as you can’t teach theoretically; they will kill you in class,” he exclaims. Simultaneously, Vegesna managed the college laboratory and given that he had full access as the computer engineering graduate he was back then, he used it to his full advantage, spending nights experimenting on main frames.

Another thing that piqued his curiosity was microprocessors, taught by a Korean professor, also an employee of General Motors. “While everyone focused on how to use it I wanted to know how to design it,” notes Vegesna. This led him to attend a conference where he met Roger Ross from Motorola, who sent him textbooks on microprocessors after learning about his interest in the same. “When I told him I needed to learn more, he connected me to the best principal engineer of microprocessors at Motorola,” he remembers.

Vegesna, who needed to write a thesis on microprocessors, was now a privy to Motorola’s patents and used these to create a software simulation of the Motorola 68000. At this point, Vegesna was graduating and approached them for a job. India in the 80s didn’t have much opportunity, and so he showed them his thesis.

Impressed by his outstanding work, Motorola invited him for an interview in Austin with top management; six hours later Vegesna had an offer letter in hand. “They asked me if I was willing to move to Austin; I said I moved 10,000 miles from India to the U.S., do I care if it’s California or Austin?” he quips. For the next five years Vegesna designed

14.2 million unique visitors per month 130 million page views per month Internet is growing at 13%; Sify.com is growing at 20%; CHANNELS:

The major channels are sports/news/finance/ movies/mail/ WWE/ samachar Minor channels are food/videos/astro/travel/radio SIFY SPORTS:

Is the 4th-largest sports portal in the country Over 5 lakh visitors in India during the India-Australia ICC World Cup match 2011 Over 19 lakh visitors in India during the India-Pakistan ICC World Cup match 2011 Over 19 lakh visitors in India during the India-Pakistan ICC World Cup match 2011

microprocessors at Motorola, wrote the microcode for the 68030 and specifications for the 68040. “Later, I understood the reason for getting the job so quickly. All the big guys told the head of the microprocessor division that if he didn’t hire me, in all probability I would be hired by a Japanese competitor and take their knowhow with me,” he laughs.

Interestingly, Apple’s first laptop used his microprocessor. “I felt it was my brain in every laptop,” he exclaims.

BEGINNING OF ENTREPRENEURIAL YEARS Vegesna’s mentor at Motorola, Roger Ross, known for his ability to spot talent, was looking to start up on his own and invited Vegesna to be a part of his venture, Ross Technology.

“I joined as CTO, focusing on technical aspects of the business,” he mentions. He was integral to the development of the first-generation HyperSparc, which Sun Microsystems Inc chose as the CPU heart of its first multiprocessing computer.

Despite being a technical guy, Vegesna worked with an Indian mindset and wondered why he was just designing and not selling. His boss, luckily for him, gave him a free hand to market during the day and design at night. “Having a good mentor and a strict boss in your early days is very important to instill good habits as it sets you on the right track,” he emphasizes. The two went on to build a Rs.900 crore-Rs.1,350 crore company which was finally bought out by their investors. “I made my first million at this point,” he says.

Being young and restless, with an ambition to become CEO, Vegesna decided it was time to start his own venture and moved to California for the same. He founded ServerWorks in 1994 to create a server environment, taking a generic volume part and make it a bigger server platform. At that time, Intel was making microprocessors and had just come up with the Pentium, making desktops. Microsoft was making its operating system.

To read more, grab the June issue of Entrepreneur Entrepreneur + June 2011 To Subscribe, visit www.entrepreneurindia.in

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success strategies [Tips to stay ahead]

CALL OF THE

Wildcraft has scaled new heights in a niche segment on the back of its conscious strategy to stay focused on the core of its business—the outdoors.

By Shonali Advani

O

SCALING NEW HEIGHTS (l. to r.)

Dinesh K.S. and Gaurav Dublish

ver a decade ago, Dinesh K.S., Founder Director, Wildcraft, was seen rappelling down mountains; today he’s scaling up operations at his venture that manufactures its own brand of outdoor gear and equipment. From a garage startup to a pan-India brand as it stands today, Wildcraft’s success story is largely attributed to the entrepreneur’s passion to grow the community of adventure sports enthusiasts

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and has become India's #1 outdoor gear and adventuring equipment brand with a national footprint. It has over 32 exclusive stores and is available in over 500 stores across key Indian cities.

ROCK BOTTOM DAYS Some of the best experiences we have are thanks the company we keep. This holds true for Dinesh K.S., a qualified engineer, who

got introduced to adventure sports through his friends. It didn’t take long for Dinesh to become an active rock climber. This propelled him to secure professional coaching by a premier mountaineering institute in India. The Indian market for outdoor equipment then was nonexistent, and climbers within the community depended on Nepal, as well as relatives/friends from the U.S. or Europe. While still working in Bush Television, Dinesh decided to organize a mountaineering expedition to the Himalayas.

This was 1988, and televisions were selling like hot-cakes in India, which meant everyone was expected to work overtime. “I was in a spot and had to quit because I needed to make this expedition a success,” says Dinesh.

A BRAND IS BORN Wildcraft was born unexpectedly. A turning point in Dinesh’s plans to pursue climbing as a full-time activity came with an accident which ruled out the outdoors completely. Taking this as an opportunity to stay connected with the community, Dinesh decided to get involved, albeit in a different way. The core idea was to fill the gap that existed in the market and manufacture equipment and gear for adventure sports enthusiasts. “I wanted to continue and be associated with outdoors,” recalls Dinesh. Between the years 1990-’91, he started sourcing and fabricating on his own. By 1993, Wildcraft started as a garage startup, the first product being free-standing dome-heads. “It was a naive idea, as the industry consisted of a handful of people in Bengaluru, Mumbai, Delhi and Kolkata,” laughs Dinesh.

FOCUS ON QUALITY Sourcing premium quality raw material for tents, day-packs and rucksacks, the most produced items back then, had been a major challenge right from the start. Luckily enough, Bengaluru and its surrounding areas was the hub of textile/garment industry, back then. “I had friends in this sector so it was easy for me to get an entry into factories,” he says. However, by mid-90s sourcing fabric, even locally, was beginning to become a problem. The entrepreneur looked to the Far East as a solution and began importing nylon and polyester from Korea and Taiwan. “The best manufacturers for these fabrics are found here and we continue to source from these regions till date,” states Photo© Sanjay Ramchandran

Dinesh. Since inception, as the only player in the Indian market, the firm’s key strategy has been a focus on quality. It was also ahead of the curve in terms of ergonomics and types of raw materials used, like fleece for jackets which was only used by exporters of big brands. “Do five things but do them well,” he says. The community, even today, is made up of three broad categories—serious, core outdoor enthusiasts; serious one-off guys who like to take part in adventure sports but have other responsibilities alongside and lastly the aspiring contenders who want to be associated with the community. “We didn’t want the serious guys to look down on us,” points out Dinesh. This, he believes, has worked successfully for them. By 1998, the garage startup was incorporated into a full-fledged firm.

ADVENTURE PROGRAMS TO BUILD THE COMMUNITY Funding was an issue and the scale at which they were working didn’t make it very interesting for Dinesh. “I was in two minds whether to take it forward or not, and had to do some serious soulsearching,” he mentions. One strategy, from the mid-90s, was to conduct corporate programs and get more people introduced to the outdoors via a different avenue. “The question was: How do we get them to the rocks?” he says. So they tried artificial climbing. In 1995, Dinesh got the Youth Services and Sports (run by the government) to pull out funds and erect a 25-foot wall for climbing. “Though this was more popular in the west, we thought this was a smart way to build the community. Like any venture, we needed to look at different ways of bringing in revenues,” says Dinesh. As an extension to this Wildcraft, more recently, went on to bring in a separate team for institutional supplies, primarily for corporate entities. “They buy our merchandise as part of their employee incentive programs,” says Dinesh.

BRINGING IN BUSINESS BRAINS Circa 1999, things were still not picking up at a visible pace. Dinesh was ready to take a complete break and went to the U.S. while his co-directors ran the company. Once back, Dinesh met Gaurav Dublish at a camp who subsequently gave up a position as VP of Standard Chartered and joined Wildcraft as shareholder cum Director & Head, Marketing in 2001 along with Siddharth Sood, Director and Head, Finance. A few years later, in 2004, Dinesh rejoined the company full-time

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money department [Where to get it, how to make it, how to keep it coming in]

3

Expert advice and lessons learnt from financial missteps of small-business owners.

By Lisa Girard

Common Accounting Mistakes

T

ax time isn’t the only time business owners should review their accounting practices. Experts say small-business owners often make seemingly simple accounting mistakes that—which at their most extreme—could mean the difference between a good and bad fiscal year. Here are three common missteps entrepreneurs make and the lessons you can learn from them.

1

YOU TREAT SALES AS REVENUE BEFORE THE PRODUCT OR SERVICE IS DELIVERED.

Stuart Reisch, co-founder of Transform, a company that makes custom storage units, learned this the hard way after unwittingly counting deposits as income his first year in business in 1999.

The New Rochelle, N.Y.-based company had Rs.5.4 crore in expenses versus about Rs.6.3 crore in sales, resulting in what looked like a Rs.90 lakh profit. However, Rs.90 lakh worth of products that were sold weren’t actually installed until January of the next year. As a result, Reisch ultimately had to revise the company’s financials and realized the business had only broken even—not earned a profit after all. He then decided to temporarily halt plans for growth. “[Instead] we worked on cost containment to improve our bottom line,” says Reisch, whose 65-employee company now has annual revenues of Rs.2,925 lakh. “By the midpoint of the following year, we [were able to] modestly increase advertising and add a salesperson.”

Lesson learned: When you make a sale, don’t count it as income until your company 114 Entrepreneur + June 2011

has delivered the product or service to the customer, according to Christopher G. Gamble, a certified public accountant at Kroner Gamble & Co., a Rochester, N.Y.based accounting and financial-planning firm. Great sales in a month that will be delivered to the customer later, but are improperly posted as revenue for the current period, can give a company a false sense of profitability, Reisch cautions.

2

YOU DON’T CONSIDER THE FINANCIAL RAMIFICATIONS OF A LARGE PURCHASE, SUCH AS EQUIPMENT.

When you pay cash for a new server or piece of equipment, one of the benefits is that you can depreciate the equipment over time. But experts say dipping too far into cash reserves can put a business at risk in more ways than one.

“What many business owners don’t understand is that making a capital expenditure on equipment or furnishings not only depletes their cash reserve in the short term, but will come back to bite them at tax time,” says Franka Winchester, founding partner of Pacific Crest Group, a Larkspur, Calif.-based business- management and financial-services firm. For example, when you have to gradually write off a large asset you can’t claim it as a one-time expense on your taxes, according to Winchester. And if you can’t claim that expense to offset profits, your business will likely be on the hook to pay more come tax time.

Lesson learned: When making a major purchase, such as equipment, consider a

short-term loan if purchasing with cash would put a serious dent in your reserves. Using a credit card is an option for items you know you can pay off in a few months, but beware of high interest rates. Leasing is also an alternative if, say, the equipment you’re considering requires periodic updates or you need to use an item only temporarily.

3

YOU CONFUSE PROFITS FOR CASH FLOW.

When Anne-Marie Faiola tried to ramp up expansion of her soapmaking supply company shortly after its founding in 1998, she couldn’t figure out why she was showing a profit on paper but never seemed to have any cash left at the end of the month. As it turns out, she was spending money on product development faster than she could earn it back. Her business was staying afloat by borrowing from credit cards and a line of credit. “If you do that for too many years, you will find yourself heavily in debt while still being profitable and wondering why you can’t seem to get ahead,” says Faiola, founder of Wash.-based BrambleBerry.com, which now generates annual revenue of Rs.5.4 crore. Once Faiola realized more money was going out than coming in, she slowed spending for three years to curb debt.

Lesson learned: Always track what you’re spending versus selling—and take a long, hard look at your financials before moving ahead with expansion plans that would put your business too far into debt.

©Entrepreneur Media, Inc. All rights reserved.

Illustration© Chaitanya Surpur

To read more, grab the June issue of Entrepreneur Entrepreneur + June 2011 To Subscribe, visit www.entrepreneurindia.in

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back stage SOCIAL MEDIA’S MUSICAL ROOTS MUSIC. It is a force so powerful it drives innovation in technology and fosters social interactions. A look at social media’s genealogy shows it can be traced to the early days of music sharing over the internet. And it all started with a peer-to-peer service named for Shawn Fanning’s haircut.—Entrepreneur Staff

JUNE 1999: The aforementioned

JANUARY 2000: Tim Westergren

Shawn Fanning and his buddy Sean Parker launch Napster, a free music file-sharing program. In December of the same year, Napster is sued by the Recording Industry Association of America for copyright infringement.

Worst Christmas present ever.

takes his music genome project idea to the next, less litigious frontier and launches Savage Beast Technologies, which five years later morphs into Pandora Radio. (All genomes, apparently, eventually lead to Coldplay or Dave Matthews.)

APRIL 2003: Apple’s iTunes music

AUGUST 2003: Chris DeWolfe and Tom Anderson launch Myspace, which gains popularity with unknown musical artists who use the site as free promotional tool. Also becomes the place where high schoolers post too much information about themselves.

store launches. A new industry is hatched: The Rs.44 song download goes mainstream (and broke artists go even more broke).

JULY 2006: Jack Dorsey launches Twitter to the public. Traditionalists

have mixed feelings about the social network, but Twitterholics rejoice in the glory of knowing when their friends are changing a light bulb. ©Entrepreneur Media, Inc. All rights reserved.

130 Entrepreneur + June 2011

OCTOBER 2010: In a Facebooklike effort to give itself a makeover, Myspace launches a new version of its site, with a focus on social entertainment.

MARCH 2002: Social-networking site Friendster is founded by Jonathan

Abrams (a friend of Parker’s). The surge of the social site begins.

FEBRUARY 2004: Mark Zuckerberg starts Facebook. (Or did he steal it?

You decide.)

?

WHAT’S NEXT: In a play for ultimate control over the worlds of social media and music. Mark Zuckerberg records a spoken-word album (tentatively titled You Have Part of My Attention) to be released exclusively on iTunes. (OK, we made that one up. But it could happen.)