We are bound to have NPAs, tax evasion and everything else that is wrong with business and corporate sector.
Every profession needs training and subject knowledge to practice. There is nothing such for entrepreneurs. No entry barrier. No prerequisite or training or skill set check – nothing.
Everyone wants to become entrepreneur. Form small Panwala to large businesses – all are entrepreneurs. Whether one like it no, many of our entrepreneurs do not know WHAT and HOW of business. We have degree holders engineers, textile designers, graduates , under graduates, uneducated everyone you will find is doing business.
Why many of our real estate developers are in trouble? Asset rich but Cashflow crisis , why many are good at borrowing but do not know neither their overall cost of capital nor profit margin ? why many business just survives on tax evasion? Why smartest of IITsians fails in business? Why smartest of MBAs are failing in business?
There is a large number of entrepreneurs who do not know difference between cash-flow and profit They assume cash flow as their own money and live accordingly. Many would assume hefty margin to be the only think they need to take care of.
Business acumen is one part and its is necessary however knowing what is the success and what is the parameters of financial success is equally if not more important. Many of the entrepreneurs illiterate about this.
Deduct from your stated profit tax evaded, dead stock , bad debt , required provisions not made and you will know what your real profit is.
Deduct from cash-flow , creditors to be paid , dead and slow moving stock , add receivable debtors and salable stock to know whether you are spending your own money or borrowed money?
Knowing all these critical data is very important for every entrepreneurs to know. Unless these are known acted upon to improve, leakage will continue and entrepreneurs will keep living on borrowed money, bankers will face splurge of NPAs and tax department will have long list of defaulters. How many businesses can afford to hire CXOs ?
Even the biggest entrepreneurial example we give of our time faces charges of business without integrity. That success story is based on many wrong doings.
There are entrepreneurs who thrives on tax evasion, who thrives on corrupt business practices, who thrive on bending rules of the land and who thrive on ignorance. Rest are really thriving. Select your real category.
Entrepreneurship is in vogue , it is important however we also need preparation for that. Institutions like TIE and many others are doing great job but its spread must expand and expand very fast to all size , sector and geographies.