We recently concluded our half yearly board meeting… and as I was walking out of the same, I realized that our organization has come a full circle. We are once again looking for strategic investors to fuel further growth, and the discussions were revolving around how to project our future, and who will present our organizational story etc.,
My thoughts went back to one of the earlier board meeting, when we had just opened up the organization to a new set of investors. We were questioned about how each business was behaving, and why we were running short of working capital. The staffing business was growing; but the training division hardly had any takers. The Software Development Center was subsidized by our training. The creditors list was growing too. This was the period of the dotcom burst.
Businesses were being built as websites without real business models or objectives – there was more theoretical content than practical business strategies, and we too were caught in this web. This was the point we realized that we had to change our focus from inward to outward, and it was the inward focus that had driven us to this corner; and we did not know the way out.
In reality, profits were flowing in steadily in the staffing business but we were losing in other business. We had to take a few harsh decisions – First, we had to close the training division, and had to put the dream of building a software services business in the backburner as it was taking our concentration from the profitable staffing business. We realised that most of our issues were because of our ignorance in managing finance and getting the correct MIS.
When we were running the training division, we were not running short of working capital and it was always positive. This was because the trainees paid upfront. We were growing in the staffing business, but we had cash crunch as we had to pay salaries to our consultants and the funds would be released only after a couple of months. Increase in business meant a proportionate increase in the working capital – this is a fundamental concept, and we learnt this after some tough experiences. That is when I realised that a business can be termed as successful and stable only if its cash flows and the P&L were positive. Knowledge of these fundamentals are very crucial for any business to have propelled and sustainable growth.
The staffing business had started growing steadily and we reached new milestones every month. There was not much movement in the software development services. This growth in the staffing business created imbalances within the founding team. Each one of the founders had a different vision – and wanted to take the company as per their vision. The new employees and senior teams started aligning themselves to the founders. The founding members had brought in team members during the early stages and this contributed towards building a great organisation as the ownership and passion within the team was very high. There were conflicting views and polarized teams, but all were working towards the common goals. Even while the Board plays a major role in deciding the direction of the company, the team became the referees.
Looking back, I realise that no proper agreement or framework within the founding team was the root cause of the difference of opinions. One of my mentors stated, all teams will be together when the going is tough and the profits are invisible, and the divide happens only when there is a surplus… Very true.
That was the year when the organisation grew in multiple proportions, and the performance was sizzling. We repaid all the loans within six months. That is when I realised the power of entrepreneurship, a pumped up passionate entrepreneur can beat any market expectations and sail to new highs – his energy is like a sprinter; it pumps up when they compete.
The growth imbalance lead to more imbalances; and these imbalances had a positive flip – many entrepreneurs were born out of this; and all of them are doing well in the same staffing business.
After prolonged discussions and debates, the final call had to be taken. The founding team decided to part ways as there was no middle ground or framework to operate. This was communicated to the teams. This was one charged up moment – will we survive the partition, and how???
Coming soon… in the next instalment…
Wish you all Happy Diwali . Every one has Entrepreneur within them , we have to crack them using colorful Crackers.
Journey of Entrpreneur
Part 1 : http://wp.me/p19Spj-5X
Part 2 : http://wp.me/p19Spj-61
Part 3 : http://wp.me/p19Spj-6h
Part 4 : http://wp.me/p19Spj-6s
Part 5 :http://wp.me/p19Spj-6C