The Hindu Business Line : Entrepreneurs rise early

It is easier to be a successful businessperson or an entrepreneur than a famous opera singer or artist, writes Christopher Golis in `Enterprise & Venture Capital' (www.vivagroupindia.com). However, those walking the entrepreneurial path should have four necessary ingredients, viz. `enthusiasm, creative tendency, calculated risk-taking, and energy.'

High energy level is what makes entrepreneurs jump off the bed and get up early in the morning, says the author. Entrepreneurs have an interest in money. "Typically a natural entrepreneur will have had jobs in childhood and understand naturally the value of money and how to use it as a resource."

Entrepreneurs are the minority in a world that abounds with people who are conservative, resisting changes and rather preferring life to become a habit. To achieve their goals, they put obstacles in the path of entrepreneurs.

"The ability to overcome these obstacles with creative solutions and do it again and again and still maintain enthusiasm is a sign of an entrepreneur."

The book guides wannabes in starting a business, taking over businesses, writing a business plan, negotiating with the venture capitalists (VCs) and raising the money.

"The farther the business is from the money the smaller the probability of gaining funds," says Golis.

Successful VCs, for example, "refuse to consider any business where the head office is located more than 90 minutes' travelling distance.

Venture capital requires hands-on involvement and being too far away can be a knockout."

The author advises VCs to talk to the entrepreneur "at least once a week and visit, say, once a fortnight. If a VC is sitting on the boards of twelve companies and nominates someone else to maintain contact, it is a warning to the entrepreneur that there will be little personal contact."

A chapter on valuation distinguishes between pre- and post-funding valuations. "For example, if an investor, after an investment of $1 million cash which remains in the company, owns 40 per cent of the voting capital, then the post-funding valuation is $1 million/0.4 or $2.5 million." Pre-funding valuation is $1.5 million (that is, $2.5 million less $1 million).

Here is another example on valuation: "A start-up company is seeking $5,00,000 and projects earnings of $1.5 million in five years. The market is large, advantage is average, and the management team is excellent. Apply a discount multiple of 8, giving a discount rate of 48 per cent." How much stake can the VC look for? To arrive at the answer, first compute the value in five years (that is, 6 times 1.5 or $9 million), and discount it at 48 per cent, to get $1.27 million. "So, $5,00,000 should buy 39 per cent."

Instructive material.

Discover your passion

There are hundreds and thousands of people in each profession, but only a few are successful? Why so? Because the few are "the ones who get involved in their work," says Virender Kapoor in `The Greatest Secret of Success: Your Passion Quotient' (www.macmillanindia.com). Passion does two things for us, he explains. "First, it drives us to be ourselves and live and behave like what we actually are. Second, it also means being in harmony or integrity with ourselves."

One of the many shades of passion is seeing yourself being there or seeing the end product. It can make you walk the extra mile, though you wouldn't feel the effort; so, "if any activity appears to be effortless then it is a strong indicator that it could be your passion."

Watch out, the dividing line between passion and obsession is thin.

"As long as you can keep your feet firmly on ground and keep your head cool and level, it is fine to be obsessive at times. High end achievers often do this."

To help understand if liking something is in fact passion, Kapoor offers the idea of test drive: "Try your hobby for about 80 hours, i.e. experimenting for about 10 days at the rate of 8 hours a day." You may then know whether the experience matches with your expectations.

"At times during our day's work we begin to feel that what we are doing is boring, claustrophobic and meaningless." A common problem, you'd agree. Reasons for the malaise can be many; such as, the job is no more exciting and you feel `Oh! I have done it all', or there is a clash of ethics and values with your boss. Take a break, go on leave, or resort to a sabbatical, advises Kapoor, as antidote. "During the free time you can check your problems in a more realistic manner."

It is possible to put fizz back into your current job, he assures, and offers `more than a dozen practical tips' for the purpose.

Ready takeaways for investors too.

http://BookPeek.blogspot.com