These days start ups, venture capitalists, angels are generally associated with the internet, software, or IT start ups in general. They have to not necessarily be related to IT alone, it might relate to any body and everybody who wants to start an enterprise of their own. I would like to share my experiences about starting my firm.There are as many opportunities in manufacturing as there are in services sector.And also would like to share my views on the general trends that we might see in the Indian manufacturing sector in the coming 2-4 decades.
I am a Mechanical Engineer planning to start a foundry tentatively pegged at 3 Cr INR.By all probability it should up an running in 8-9 months from now.Before starting we made an extensive research on Indian Manufacturing that would have high growth prospects. And I would like to share my research and probably few ideas to work on.
All startups : IT, Manufacturing or otherwise many things are common but again have their own traits. Knowing of which can make life easy for many who dream of starting their own enterprise.
The general economic activity of a country is summarised as the GDP of that country. Its subdivided into Agriculture, Services and Manufacturing sectors. Each is measured individually and its percentage to the total is calculated. Looking at the general economic history of the world, every economy goes through a phases of agriculture, manufacturing and services (in that order) as the maximum contributor. Its been a tendency for all the "advanced/ mature economies" to have a large share from the services sector and very minuscule contribution from the Agriculture sector. Typically UK has 2% from Agriculture, 65% Services and rest from manufacturing. India is perhaps the only country which is still developing but has a very high contribution from the services sector. About 60% of the population is in agriculture and allied activities but only contributes about 17 % to the GDP. For the first time in the history of Independent India, Manufacturing has contributed more than agriculture in the fiscal year 2010.
The mature economies more so the G20 saw a phase of rapid industrialisation before they have settled into services. No wonder they are called "Industrialised nations". Going by the collective economic history of the world it seems probable that the Indian Manufacturing is at the verge of rapid explosion in the manufacturing sector. With about 4 lakh Engineers graduating every year, with a liberal and English speaking population, with a vibrant economy, demographics on its side. India has made a mark as a Services Giant. No wonder its been called as the Call canter of the world. The word Bangalored has been inducted to the new Oxford dictionary meaning outsourced!
The same set of factors which have seen India as a Services giant will perhaps make even us a Manufacturing giant. India can leverage from the achievements from its IT/ITES too. And India appeals to the world not just as a low cost manufacturer but to its brains and large educated, English speaking population. The stage seems to be set for this.
The worlds single largest integrated facility for auto component manufacturing and assembly does not lie in Stuttgart, Germany nor in shanghai, China nor in detroit , USA but it lies in the sleepy industrial Indian city of Pune: thats Bharat forge.
Consider this: The Macro Economics.
1. India is the fourth largest economy according to PPP: purchasing power parity terms.
2. It has one of the most youthful population with 50% people less than 30 years.
3. It has averaged over 7% growth rate since 1997.
4. India has been the second fastest growing economy in the world, only after china; with 7.2% growth rate in the Financial year 2009-10 even during the times of recession..
5. Recession effect: There has been a tectonic shift in the new world economic order where in the focus is moving away from Euro zone and US dollar to Asia: China and India. The large Foreign Direct Investments: started as a trickle is now a full fledged flood!
6. Emerging economies: The emerging economies is where the real action is. The famous (or infamous) BRIC countries might lead the charge, including Indonesia, Turkey, Poland etc.
7. The mature economies have really "matured" as markets and hardly have seen any growth prospects.For example: The "TRIAD" of Europe, North America, Japan saw almost 2-5% growth in auto. Where as the same figures in India and China for the year 2008 are about 14% and 24% respectively. And that was when recession hit.
8. India will play an increasing role in the global economy as demand from a growing working-age population will continue to drive consumption demand. We estimate that over the next decade as this population earns, consumes and saves more, these factors could contribute about 4% annually to India's GDP. The country's demographic dividend will be substantial over the next couple of decades. India will add about 110 million workers to its labor force over that time, which is more than the U.S., China, Russia and Japan will add combined.
What does this mean to any Investing company or any budding entrepreneur?
The made in India brand could well become the next big manufacturing export story.Sectors in which India can be a world beater: Metal fabrication, Specialty chemicals, Auto components manufacturing, defence, aerospace, power equipment manufacturing, Engineering services outsourcing, skill intensive-manufacturing sectors, clean technologies, R&D and design hub of global manufacturing.
If you are the sort of person who would like to solve the money problem once for all instead of working for a salary for 40 years, then a start up makes sense!
The Down Side:
Second generation reforms: The reforms of 1991 : Till 1991 India was largely "Autarkic".And after the reforms economy shifted to a new gear from The Hindu Growth rate of about 3-5%. But a second generation reforms are badly needed.
Bureaucracy and redtape: India's rise as an IT giant is a classic case of less bureaucracy and no redtape. The IT growth was largely private sector led. Unlike the earlier scenario of license/permit raj there was no growth clampers as such.
High interest rates, High inflation, and bad fiscal position.
The way out.
1.Infrastructure: seaports, airports, power, roads, restrictive labour laws, bureaucratic red tape, high and complex taxation system,
2. Governance is going to be a critical challenge and has been over the past few years, and the way India resos it would also affect its potential growth rates. A lot is being done, but it remains to be seen whether these changes will have a material impact on the economy's growth over time.
and increase the quality and quantity of its universities.
5. „ India needs to boost agricultural productivity, improve its infrastructure
and environmental quality.
„
Delivery of all these would ensure strong, persistent, medium to longterm growth, allowing India to reach its amazing potential.
Every body thinks that they have a mind blowing idea and want to start up an enterprise:
But here are few suggestions:
1. Pick good co-founders: What matters is not ideas, but the people who have them, Good people can fix bad ideas but good ideas cannot save bad people.
At the end of the day its a team work but just one or two people end up as the war horses! And in a start up its the co-founders who are the employees too and they cannot be replaced.
Pick up someone who do their work too seriously and not the people who work just for remuneration. Pick up people who border on professionalism, obsession.
The founders should include technical people.
2. launch fast.
3. Let your idea evolve:
4. understand your market.
5. Business Plan: Take your Business Plan seriously. Its again is not a complicated document. Initially I was terrified at the prospect because it had the word Business and it was asking the plan. But just put all your thoughts on paper and thats about it. And inlcude all aspects of the enterprise: who will take care of what? what do we need to get there? marketing channels?
6. Engineers syndrome: People generally tend to have this weird habit of looking at the market from an engineers point of view. If you know how to make jet engines then an enterprise does not stop at that : you should think as to how do you plan to market it? What are your channels of marketing? How will you make know the people who might be your potential clients and the services/products you offer? Break even analysis , financials, returns on investments are equally important to ponder.
7. Better to make your a few clients love you more than lot ambivalent.
8. Offer surprisingly good customer service.
9. You make what you measure.
10. spend judiciously.
11. get ramen profitable.
12. avoid distractions.
13. dont get demoralised.
14. dont give up.
15. deals fall through.
16. Friends and P.R: I was surprised the way people went out of their way to help me up in the pursuit. People we met just couple of days introduced to really influential people. Some gave us amazingly practical solutions. Just pitch up your you will see the kind of twists and turns some unkown people can influnce on it.
17. Obsessive compulsive watch on the market: What does the market want? To keep it simple just observe what the market problem is and what solution you are offering? This gives you the focus market, marketing, business model, revenue model too.
You dont need a "brillaint idea" to start a start up around. The way to make start ups work is to offer people better solutions than they have now. But what people offer now is often so bad that it doesnt take brillaince to do better.
Its hard to repeat a brilliant performance but very easy to avoid errors!
18. We Vs I: Pick up people who use the word us and we more than I. It really works and means so much of their intentions.
19. finance: Not all companies are self financed seed capital: investment.
20. Negative lessons in life more important than the positive lessons. Dont hesitate
21. Plan operations and quality assurance: Organizations. immaterial of their size put most of their efforts in fire fighting or fixing. This could be avoided by proper planning of operations.
I dont think the amount of bull shit that you have to deal within a start up is more than you can endure in your entire life. Its probably less, infact mainly what a start up buys you is time .
Many of todays companies achieved their greatest growth and success after recognising and pursuing business opportunities far beyond their original offerings.
Before all that one of the most important questions that you have answer for yourself is to Why do you want to become an entrepreneur or why do you want to start that enterprise? This needs some serious soul searching. And a question really worth pondering. Its about money? Is it about ego: owning an own enterprise? or is it achievement motivation? or is it self actualisation: trying to realise your true potential?
I am a Mechanical Engineer planning to start a foundry tentatively pegged at 3 Cr INR.By all probability it should up an running in 8-9 months from now.Before starting we made an extensive research on Indian Manufacturing that would have high growth prospects. And I would like to share my research and probably few ideas to work on.
All startups : IT, Manufacturing or otherwise many things are common but again have their own traits. Knowing of which can make life easy for many who dream of starting their own enterprise.
The general economic activity of a country is summarised as the GDP of that country. Its subdivided into Agriculture, Services and Manufacturing sectors. Each is measured individually and its percentage to the total is calculated. Looking at the general economic history of the world, every economy goes through a phases of agriculture, manufacturing and services (in that order) as the maximum contributor. Its been a tendency for all the "advanced/ mature economies" to have a large share from the services sector and very minuscule contribution from the Agriculture sector. Typically UK has 2% from Agriculture, 65% Services and rest from manufacturing. India is perhaps the only country which is still developing but has a very high contribution from the services sector. About 60% of the population is in agriculture and allied activities but only contributes about 17 % to the GDP. For the first time in the history of Independent India, Manufacturing has contributed more than agriculture in the fiscal year 2010.
The mature economies more so the G20 saw a phase of rapid industrialisation before they have settled into services. No wonder they are called "Industrialised nations". Going by the collective economic history of the world it seems probable that the Indian Manufacturing is at the verge of rapid explosion in the manufacturing sector. With about 4 lakh Engineers graduating every year, with a liberal and English speaking population, with a vibrant economy, demographics on its side. India has made a mark as a Services Giant. No wonder its been called as the Call canter of the world. The word Bangalored has been inducted to the new Oxford dictionary meaning outsourced!
The same set of factors which have seen India as a Services giant will perhaps make even us a Manufacturing giant. India can leverage from the achievements from its IT/ITES too. And India appeals to the world not just as a low cost manufacturer but to its brains and large educated, English speaking population. The stage seems to be set for this.
The worlds single largest integrated facility for auto component manufacturing and assembly does not lie in Stuttgart, Germany nor in shanghai, China nor in detroit , USA but it lies in the sleepy industrial Indian city of Pune: thats Bharat forge.
Consider this: The Macro Economics.
1. India is the fourth largest economy according to PPP: purchasing power parity terms.
2. It has one of the most youthful population with 50% people less than 30 years.
3. It has averaged over 7% growth rate since 1997.
4. India has been the second fastest growing economy in the world, only after china; with 7.2% growth rate in the Financial year 2009-10 even during the times of recession..
5. Recession effect: There has been a tectonic shift in the new world economic order where in the focus is moving away from Euro zone and US dollar to Asia: China and India. The large Foreign Direct Investments: started as a trickle is now a full fledged flood!
6. Emerging economies: The emerging economies is where the real action is. The famous (or infamous) BRIC countries might lead the charge, including Indonesia, Turkey, Poland etc.
7. The mature economies have really "matured" as markets and hardly have seen any growth prospects.For example: The "TRIAD" of Europe, North America, Japan saw almost 2-5% growth in auto. Where as the same figures in India and China for the year 2008 are about 14% and 24% respectively. And that was when recession hit.
8. India will play an increasing role in the global economy as demand from a growing working-age population will continue to drive consumption demand. We estimate that over the next decade as this population earns, consumes and saves more, these factors could contribute about 4% annually to India's GDP. The country's demographic dividend will be substantial over the next couple of decades. India will add about 110 million workers to its labor force over that time, which is more than the U.S., China, Russia and Japan will add combined.
What does this mean to any Investing company or any budding entrepreneur?
The made in India brand could well become the next big manufacturing export story.Sectors in which India can be a world beater: Metal fabrication, Specialty chemicals, Auto components manufacturing, defence, aerospace, power equipment manufacturing, Engineering services outsourcing, skill intensive-manufacturing sectors, clean technologies, R&D and design hub of global manufacturing.
If you are the sort of person who would like to solve the money problem once for all instead of working for a salary for 40 years, then a start up makes sense!
The Down Side:
Second generation reforms: The reforms of 1991 : Till 1991 India was largely "Autarkic".And after the reforms economy shifted to a new gear from The Hindu Growth rate of about 3-5%. But a second generation reforms are badly needed.
Bureaucracy and redtape: India's rise as an IT giant is a classic case of less bureaucracy and no redtape. The IT growth was largely private sector led. Unlike the earlier scenario of license/permit raj there was no growth clampers as such.
High interest rates, High inflation, and bad fiscal position.
The way out.
1.Infrastructure: seaports, airports, power, roads, restrictive labour laws, bureaucratic red tape, high and complex taxation system,
2. Governance is going to be a critical challenge and has been over the past few years, and the way India resos it would also affect its potential growth rates. A lot is being done, but it remains to be seen whether these changes will have a material impact on the economy's growth over time.
3. control inflation, introduce credible fiscal policy, liberalize financial markets and increase trade with its neighbors
.
4. „ It also needs both to significantly raise its basic educational standards, and increase the quality and quantity of its universities.
5. „ India needs to boost agricultural productivity, improve its infrastructure
and environmental quality.
„
Delivery of all these would ensure strong, persistent, medium to longterm growth, allowing India to reach its amazing potential.
Every body thinks that they have a mind blowing idea and want to start up an enterprise:
But here are few suggestions:
1. Pick good co-founders: What matters is not ideas, but the people who have them, Good people can fix bad ideas but good ideas cannot save bad people.
At the end of the day its a team work but just one or two people end up as the war horses! And in a start up its the co-founders who are the employees too and they cannot be replaced.
Pick up someone who do their work too seriously and not the people who work just for remuneration. Pick up people who border on professionalism, obsession.
The founders should include technical people.
2. launch fast.
3. Let your idea evolve:
4. understand your market.
5. Business Plan: Take your Business Plan seriously. Its again is not a complicated document. Initially I was terrified at the prospect because it had the word Business and it was asking the plan. But just put all your thoughts on paper and thats about it. And inlcude all aspects of the enterprise: who will take care of what? what do we need to get there? marketing channels?
6. Engineers syndrome: People generally tend to have this weird habit of looking at the market from an engineers point of view. If you know how to make jet engines then an enterprise does not stop at that : you should think as to how do you plan to market it? What are your channels of marketing? How will you make know the people who might be your potential clients and the services/products you offer? Break even analysis , financials, returns on investments are equally important to ponder.
7. Better to make your a few clients love you more than lot ambivalent.
8. Offer surprisingly good customer service.
9. You make what you measure.
10. spend judiciously.
11. get ramen profitable.
12. avoid distractions.
13. dont get demoralised.
14. dont give up.
15. deals fall through.
16. Friends and P.R: I was surprised the way people went out of their way to help me up in the pursuit. People we met just couple of days introduced to really influential people. Some gave us amazingly practical solutions. Just pitch up your you will see the kind of twists and turns some unkown people can influnce on it.
17. Obsessive compulsive watch on the market: What does the market want? To keep it simple just observe what the market problem is and what solution you are offering? This gives you the focus market, marketing, business model, revenue model too.
You dont need a "brillaint idea" to start a start up around. The way to make start ups work is to offer people better solutions than they have now. But what people offer now is often so bad that it doesnt take brillaince to do better.
Its hard to repeat a brilliant performance but very easy to avoid errors!
18. We Vs I: Pick up people who use the word us and we more than I. It really works and means so much of their intentions.
19. finance: Not all companies are self financed seed capital: investment.
20. Negative lessons in life more important than the positive lessons. Dont hesitate
21. Plan operations and quality assurance: Organizations. immaterial of their size put most of their efforts in fire fighting or fixing. This could be avoided by proper planning of operations.
I dont think the amount of bull shit that you have to deal within a start up is more than you can endure in your entire life. Its probably less, infact mainly what a start up buys you is time .
Many of todays companies achieved their greatest growth and success after recognising and pursuing business opportunities far beyond their original offerings.
Before all that one of the most important questions that you have answer for yourself is to Why do you want to become an entrepreneur or why do you want to start that enterprise? This needs some serious soul searching. And a question really worth pondering. Its about money? Is it about ego: owning an own enterprise? or is it achievement motivation? or is it self actualisation: trying to realise your true potential?
