Entrepreneurship

by Reinhart Van Rooy

A real entrepreneur is not to be confused with a businessman who buys from A and sells to B. An entrepreneur creates an A and creates a B. So an entrepreneur is a creator and to be able to create you have to have money. Money, for the majority of the time, is the main way for the entrepreneur to achieve his goals, but it is not necessarily only one goal. If you ask genuine entrepreneurs about their aim in life, they will answer: The realization of their ideas. Why? Because it makes them happy and provides them satisfaction. This has nothing to do with the respects they will receive, nor with the financial freedom that they will create for themselves. An entrepreneur will also reward himself, from time to time, when he thinks he has earned this reward.

When an entrepreneur has a certain vision, this vision will in itself be sufficient to provide him with enough adrenaline to get the "motor running." Of course, you need more elements than a vision to create a successful enterprise. You must have the ability to be independent, to think positively, on a grand scale, have bags of energy, and of course a sense of humor. Even if you had all of these it would still not be enough but they would be a solid base. You must also have the ability to think logically and inventively, posses an instinctive urge to self-castigate, perfectionism and to take the right decisions at the right time. Self confidence and a desire to succeed are of course a must as are the capacity to adapt and not get too attached to people or things. Then still there is the question whether a new entrepreneur, with all these abilities, will stay as the entrepreneur and not be swallowed up by the company that was founded by him. Many times the entrepreneur can be found working as an employee in the company he founded. Entrepreneurship is a top sport. You have to constantly fight for it, laughing, crying, falling down and getting up again. Heaven and hell, misery and joy and sometimes a great deal of both. In other words no rest. And that is something that not everyone can deal with.

It is very satisfying of course when you have the ability to make something out of nothing. By the time an enterprise is up and running the entrepreneur is often already busy creating something totally different, a new challenge and a new idea. You have to take risks and often do things before you have thought about them. Of course you need a good aptitude for estimation as over expectation is fatal for an entrepreneur. An entrepreneur must always be thinking about not just the present but also the future, as he will eventually land in the future. Most entrepreneurs don't think small because to think small is to stay small and thinking big is to grow big. Of course thinking big means big risks and this gives rise to the opportunity of having big failures.

There are other dangers and pitfalls to which an entrepreneur opens himself. How do you deal with the bad side of people, market changes, the economy and the banks? Apart from these dangers that the entrepreneur must face, his biggest enemies are fear, stress and the people and institutions, which attach themselves to the company as bloodsuckers, who try to make profit from the entrepreneur's creation. These, the so called company parasites, are: the tax authorities, fraudulent bookkeepers, company advisors and swindlers amongst others. If this was already not enough, an entrepreneur also has to deal with money, employee, legal and technical problems as well as fraud. Sometimes these come individually, sometimes together. It is something actually enjoyable when the problems are large and even better when they grow into the international arena. Clearly it needs a lot of experience to deal with this sort of problem and it is very important that you get the right amount of rest and sleep so that you can correctly analyze your emotions.

A few tips

Face the danger, don't run away. It doesn't matter how hard it sometimes is: Try to understand the people involved. It is useful if you have a basic understanding of human behaviour so that you can keep things in perspective. Try not to take criticism personally and be true to yourself but take a step back and always try to learn from your experiences. It is important at this point to not be influenced by so called "know it all's."

"Don't abuse your authority." It is often said that entrepreneurship leads to heart attacks, gastric ulcers, brain tumors, divorce, loss of friends, loneliness, non-stop stress, misunderstandings, jealousy, social removal, emotional and financial failure. In short, problems, problems, problems. This may seem to be an exaggeration but believe me it is all true. In fact there is even more to suffer: you lose your friends, your health, your emotions, your sleep, your social life, after a few years your family life and on and on it goes on.

A positive aspect of entrepreneurship is that you do not have to study for it. You simply have it or you don't and if you have it you must develop it by practice. Entrepreneurship is a matter of practice, which needs a very high emotional quotient, the so-called EQ. We do not need to worry too much about the IQ as what we are unable to do ourself, we delegate to others who can do it. Whilst I was at school in my youth, an entrepreneur was invited to a question and answer session which was a preparation for our exam. The teacher's intention in having the session was to show the class how important it is to study hard so that we could become like that entrepreneur. To the amusement of the class, to every question asked in the class the entrepreneur replied that he would answer it later. The teacher asked whether he actually knew the answers. The entrepreneur replied, "Of course not. But I can have someone here within 30 minutes to answer all these questions correctly." I hope that I never become an employee again as I can't do anything.

In the past I wanted to be a teacher. Crazy, really. If there is one group of professionals who do not understand the concept of entrepreneurship then it is those men and women of words. The reason is that they are probably thinking too much - too much theoretical and not enough practical. This makes me think of my uncle Lau who was a very learned university professor. He suffered from many depressions because he would see his students growing up to be successful and rich businessmen and it was a phenomenon he could not understand as he thought he was much more intelligent. After all, he had studied much more than his students. The conclusion is that intelligence and learning are welcome but they can also be a hindrance. You can't worry about what you don't know. Do you remember? First comes doing, then thinking and then daring to follow it all the way. You can, of course, always go back.

Benefit of Pressure

I think it has already become clear that entrepreneurship brings a lot of pressure but this pressure can be a springboard. There are people who can only achieve when under pressure and there is also a connection between how creative people can be if they are completely at the bottom and have to get up. The fear of failure and the desire to succeed are the springboards towards building a great company. It brings new ideas, inventions, marketing programs and so on. Having good intentions is not enough though, there must also be desire. The way to hell is paved with good intentions. Thinking is one and doing is two or more usefully, thinking is two and doing is one. You must realize, should you decide to follow the entrepreneur profession, then you are stepping onto a running train, which does not stop, and you can't get off. It is very exciting to have a so-called tunnel vision but as the movie star Woody Allen once said "the light at the end of the tunnel might also be a fast train coming towards you."

While concluding, I will try to make a distinction between an honest and a dishonest entrepreneur. To be big and successful you have to be tough but you have to remain fair and honest. Never forget, honesty is the best policy and with this you create fewer enemies, of which, I'm sure you already have enough. From time to time, a stratagem or avoiding something is however acceptable as you have much to protect.

(Van Rooy own's the 'K33', a brand in resolving the problem of the people suffering from hairloss)

e-marketing Tools

by Kashi Raj Bhandari

Electronic marketing, widely known as e- marketing, is a recent phenomenon compared to other traditional marketing tools. Although some Nepali organisations (including business houses) are using e-business concepts and applications within the organisation, the e-commerce part is mainly limited to website hosting.

For effective communication with its target audience or stakeholders, any organization is highly recommended to use e-commerce as the dominant tool in communication mix. A substantial portion of the resources being allocated for the traditional tools could be transferred to e-marketing.

E marketing comprises of two components: e-business and e-commerce. E-business deals with internal communication with its employees and partners in the supply chain or network. For instance, intranet, instant messaging system and extranet. But e-commerce is communicating and interacting with its customers and stakeholders.  For successful e-marketing both are equally important.

E-commerce starts with understanding how the customers are acquired in the web or building traffic to the website.  Cost benefit analysis of e-commerce, resource allocation, database building, and e-business are the steps in the customer acquisition process. After acquiring the customers the next persisting challenge is customer retention. The AIDA (Awareness. Interest, Desire and Action) model of communication level is very relevant in the e-commerce.

E-commerce Tools

E -commerce should not be taken as a replacement for the traditional communication tools but rather be applied as a way of reinforcing the message. A co-ordinated approach between the traditional and e-commerce tools produces better results.

Some widely used e-commerce tools are presented below;

A. Viral Marketing:   

Sending messages and information from consumers to consumers leading to large-scale market acceptance is known as viral marketing. Today's markets are like networks of consumers where companies can spread the message using these networks. In some sectors like tourism where word of mouth plays a crucial role, using viral marketing will benefit companies tremendously. A small line at the bottom of web page, for example ' send this information to your friend/s' or 'tell you friend' icon somewhere in the website will help spread the information about products and services. Another way of spreading information is providing incentives to those users who have already purchased the products or services. Viral marketing may prove an important tool as it can spread the message to large number of people to create awareness about the offers at very nominal costs.

B. Search Engine Optimisation:        

Users use search engines and directories hunting for information they require. When users hunt for the information using search engines, they are presented with number of selections. But all the selections do not draw attention of the users. Usually it is the top five or ten. Search Engine optimisation involves designing the site in order to be shown up in the higher rank of the search engines. It can be achieved in two ways:

1. By fine tuning the design and content of the website

2. By paying for the position

In order to fine-tune the design of site, which will lead to higher ranking by the search engines, organisation should give due attention while designing the content of the site and other technicalities. The keywords should be placed in the title and near the top of the pages and should be frequently used in the website.

Another way of search engine optimisation is to pay for the position in the search engines. Most popular search engines like google provide this kind of services. One study conducted in April 2003 indicated that more than 75% of surfers use search engines to navigate the web. This tool helps increase number of viewers to the  website.

C. Internet Advertising: 

Another tool of e-commerce is internet advertising. Internet advertising has two components:

1. Banner ads

2.      Sponsorships

Pop-ups, pop unders and inertial are types of banner ads. The banner ads catch the consumers by surprises, which is good for new offers. However, care should be taken as they might equally annoy the users. Banner ads can reinforce the message and thus are excellent brand building device.

Another way of Internet advertising is long-term promotional agreements with major sites to put the brand name or logo of the sponsoring company on the major sites. They are known as sponsorships.

While doing Internet advertising, companies are suggested to use both of them as both have positive and negative sides. However, effectiveness of the Internet advertising should be constantly measured by click through rate.

D. Design and Quality of website:

The purpose of advertising and promotion in the web is to build the traffic to the website of the organisation.  A Company can enhance its website by making it more customer-oriented or by  customising its site to these target audience as per each groups' need. Interactivity is another factor which should be incorporated in the website.

E. Free offers and promotions:

Offering free coupons and other sales promotion online aggressively is highly recommended as they produce instant results. One example could be 'buy one get one free'. The coupons can be distributed in the form of sweepstakes and contest using specialised intermediaries such as freeoffers.com.

The e-commerce tools used for the communication should be guided by the objectives of communication campaigns. If the objective is to create awareness about services and products, those tools should be employed which can affect the cognitive stage of communication. The cognitive objectives relate to changes in an individual's thought process, including attention and increasing consumer knowledge.

While employing e-commerce tools, organisations use different tools for the different markets, as a single tool does not serve all the purposes. S. Krishnamurthy, a noted e-marketing scholar has suggested a matrix (see box on the previous page) as a reference for the e-marketers.

The tools mentioned in the matrix are very useful for those companies who are exporting goods and services to the developed countries from Nepal, travel and tourism products and services being some of the most promising ones.

(Bhandari is associated with Nepal Tourism Board)

CRM & Nepali Business

by Santosh Poudyal

Today, businesses are increasingly realizing that the cost of attracting new customer is rising and losing a customer means not only losing a single transaction but lifetime worth of purchase from that customer. Against this background has emerged the technique of Customer Relationship Management (CRM) which is slowly gaining attraction from the Nepali businesses as well. However, there seems a lot to improve here in deriving maximum benefit from this important invention of modern management science.

CRM involves collection of different customer information and applying this knowledge to enhance customer service. It is rather indispensable to create computerized lists of existing and potential customers from different sources and merge them electronically.

It means, in the initial phase of CRM implementation business must consider the customer information that are valuable and critical. They must understand ways to capture the customer information that reflects their behavioral pattern. Though this is tricky and challenging.

All these are basically intended to add a little bit of feel good factor that may please the customer for a repeat purchase. Hence customer information should basically serve its purpose in extending relationship with their customers.

Today, businesses aim to integrate themselves into the lives of million by winning product loyalty from their customers in all possible ways. For example a hotel sends greetings and offers discount to customers on their anniversaries. Such efforts clearly indicate the personal touch and hospitality that the business is intending to provide to the customer. CRM concepts are always supportive of such ways that create mutual respect between the business and the customers.

Cost in implementing CRM

In the present context, CRM does not pose any cost-related concern for any business. CRM software is used to maintain the database of customer and to retrieve the necessary information. Generally, CRM software acts as part of information system of different offices. The cost associated with implementation of CRM requires software, hardware, training and maintenance

Software:

Market offers few softwares that are definite value for money but are either short in supply or unaffordable by small businesses. MS-Outlook Express is a better alternative in such circumstances.

But for those businesses which are always in the look-out for a better solution, local software companies may prove to be more than they bargain for. Such software companies develop related softwares at around Rs. 10,000 to Rs. 20,000 depending upon the requirements and size.

Hardware:

Information need must be fulfilled among departments within the organizations. Thus, this calls for the use of proper networking system. A simple LAN (local area network) system will be enough for this purpose.

Training:

Training is generally assumed to be a costly affair whenever a business introduces  technological changes. Software training has to be provided to the user and hardware to the database or network administrator. But if the software is bought from the local software company then the cost of training often falls well within the retail price of the software.

Maintenance:

Maintenance includes handling errors, changes or trouble shooting of the software and the hardware. Further, if the business has plan for expansion then their need for technological reforms may entail additional investment.

Uses of CRM

CRM can have wide variety of uses other than just serving the customers. It can be implemented in different departments of an organization as it forms the basis for decision-making. For example, marketing department may use CRM to offer special business packages, formulate new marketing strategies, discover new niches, invent ways to persuade customers, customize their products and services, redesign existing products, venture into new market after proper analysis of customer preferences by use of CRM.

Similarly, human resource department can retrain employees for better service according to individual customer need.

For example, if credit needs to be granted or extended, such decision may be easily assisted by CRM. Collateral is one requirement for such task but the psychological study of customer is equally important. Since the database maintained by CRM contains all the information about individual, we can predict the behavior of that particular individual. And hence CRM helps to make reliable decisions while extending credit through careful analysis of the psychology and behavioral pattern of credit seekers.

TQM (Total Quality Management) and CRM are two much correlated concepts in the business in respect of customer satisfaction and quality service.

CRM in Nepal:

Though CRM should logically be an independent department, in Nepal it is being handled by marketing department (esp. by sales executives). CR is not given much focus in our context whereas the case is reverse in other countries. A quick survey across the Nepali businesses shows that both the traditional management practices and the unaware customers are responsible for perpetuating this culture. Management in Nepal always takes CRM as cost rather than investment, on the other hand customers themselves don't know how they should be treated by the business. By the same token, business seems to focus only on the new customer, taking the old customers for granted. 

However, some efforts in adopting CRM by Nepali companies are worth noting.

Company like DTI (Digital Telecom International), one of the leading paging service providers and which has recently started call centre services as well, has been experimenting with the concept of CRM recently. They have been maintaining customer information and organizational information for creating proper point of interaction between the two. DTI helps ensure that every call is turned into a service opportunity for the customer. Hence it acts as an information center for supporting customer relationship in various organizations. Sending monthly payment notification by pager, providing insurance service on the pager, replacing pagers free of charge in case of technical fault, sending festive greetings to all customers, mobilizing services for emergency blood search through pager are some of the services DTI provides for maintaining its own relationship with the customer.

Buddha Air's recent endeavor in implementing CRM is its Royal Club membership service which extends extra benefits to the customer by maintaining members' information. Such information tends to be invaluable in providing the exact type of preferential services like extra baggage allowance, holiday get-aways, free miles award policy and discount cards that individual customers deserve. CRM implementation as such has not only helped to establish healthy customer relationship but has enhanced also brand loyalty among the customers, claim the company sources.

(Poudyal writes on management issues)

Young Achievers

Kailash Sirohiya

Business:       Media & Handwoven Carpets

Turnover:          Nearly Rs. 1,000 million per annum

Born in Janakpur to a middle class business family that had a rice and oil mill, Kailash Sirohiya (39) now leads the largest corporate body of Nepal in media sector, the Kantipur Publications (P) Ltd.  But till completing Intermediate in Commerce from a college in his home-town, he was not interested to enter business. He cherished a dream of being a professional. Therefore, when after completing the Intermediate his father asked him to start learning the ropes of the family business, young Sirohiya insisted to continue studies and went to Chandigarh of India where he completed Master's level in Business Management from Punjab University.

But again, after coming back with MBA degree in his hand, he was facing the same question: What next? "There was no possibility for the family to give me a million rupees so that I would start a different business of my own that would suit my qualification of an MBA", he recalls. "My father was clear about it that it was his duty to bring us children up and provide the necessary education. But after that he left it up to us to do whatever we wanted to. That was what he had told my elder brothers, and that is what he told me."

Being eager to become a professional, Sirohiya also thought of joining Janakpur Cigarette Factory (JCF), a government held unit with its head office and production facility at Janakpur. And the employment with JCF was then regarded as highly prestigious as it was one of the largest and most profitable corporate bodies of the country. But as Sirohiya recalls, his association with JCF was not longer than two weeks. Within that period, he felt that the working style in that government owned unit was not going to suit him.

Meanwhile, his elder brother owned a furniture factory in Janakpur and was planning to open a show room in Kathmandu. Young Sirohiya offered to help and came to Kathmandu. "I had thought that if nothing clicks, I would go abroad for further studies. But soon the Shreya Furniture became an established brand name. The word of mouth was very good. Then I developed interest in business", he says.

The other field that he ever thought of was the police service. Together with some friends (some who joined the police service then have risen to the rank of Superintendent of Police) he brought the application form and filled it up as the glamour of that field was very good that time. But one of his friends convinced Sirohiya that as he was from Terai community he would not get good opportunities in police service even if he gets selected. "So I gave it up and tore off the application form", he says.

Thus, Sirohiya had to concentrate on business and there was no alternate available to the furniture shop that he was running on behalf of his elder brother. Meanwhile, his college days friend Binod Gyawali (his father Hem Raj Gyawali, the present day Chairman of Kantipur Publications (P) Ltd. was posted at Janakpur as a government employee and Sirohiya was in the same college where Binod Gyawali was admitted) was looking for something that he could do as a business. "We decided to work as partners and I handed over the furniture business to my nephews who were by then grown up and were capable enough to run it on their own."

This was the time when carpet business was growing. The duo (Gyawali and Sirohiya) learned about the business from two established carpet manufacturers of that time - Mr. Sedhai and Mr. Karki.  Then they set up the factory shed, initially started the business of making yarn for the carpets and later started weaving as well.

But the duo was chagrined to find that however best the quality would be in the carpet, the local buyers who would export it would not pay any good price to the manufacturer.

So they wanted to start exporting on their own and went to attend Domotext fair where they got some commitment from some international buyers. "When they (buyers) later came to visit our place, they were impressed with the quality and were ready to place as big order as we wanted. Though our capacity was for only 500 square metres a month, we took an order for 1,500 and subcontracted the job to other producers for 1000 sq. mt.," recounts Sirohiya. Soon Namaste Carpet became one of the largest exporters exporting around 70,000 and 80,000 sq. mt. per year.

In the meantime, entered Shyam Goenka in the life of Sirohiya and Gyawali. As he was the childhood friend of both of them from Janakpur days, they helped him to come to Kathmandu and start fulfilling his passion in journalism. "The first typewriter he used here was mine", says Sirohiya.

It was soon after the multi-party democracy was ushered in and Goenka wanted to publish a daily newspaper by utilising the newly found freedom of expression and right to information. And Sirohiya's public relations with the journalists had quite expanded during his days of furniture business. The offices of almost all of the prominent weeklies of that time were at or around Baghbazar. Utilising that PR of Sirohiya, Goenka set up Goenka Publications (P) Ltd. "I also financed him loan in this venture from the money I had made from the carpet business", he recalls. "But within a month he asked us to run it ourselves. We had no alternative to taking the 50% share that he offered in lieu of the money we had loaned him. Then we asked our carpet buyers whether they could support us. They agreed and sent us advance payment which was used to meet the expenses of the newspaper. Again one evening, Goenka told us that he would sell his portion off. We said he could not do that. We offered three options: Either he sells all the shares including our portion, or he buys all our shares or he sells all his shares to us."

Thus within six months of the first issue of Kantipur published Sirohiya and Gyawali had to take over the publication entirely. 

The initial days in newspaper were very challenging. "As I was successful in the previous businesses, if this venture failed it would prove the point of the critics that the money I had earned earlier was easy money. So I had to work very hard and so did my partner."

When asked to identify the success factors, Sirohiya lists down a dozen of formulas (see box). However, he regrets that he has not been able to do proper justice with his wife whom he married just one year before the newspaper venture. "The beginning was really stunning for her. As soon as the formalities of taking the bride into the home were completed, I rushed to meet a customer to sell my carpets", he says. "But she has been very cooperative", he adds.

But what did Sirohiya and Gyawali do in Kantipur that it was so successful later?

"It lacked professionalism. We encouraged it. I do not believe that whatever comes to your mind is right. I want to debate over it and let the professional logic prevail. We granted full freedom to editorial wing. They could print anything they liked as long as they thought it passed the test of journalistic principles. We set up goals on weekly, fortnightly, monthly, quarterly and annual basis and followed up on those goals. Then we strengthened accounts."

And the absence of commercial journalism then provided another opportunity to the Kantipur Publication. "There was Gorkhapatra as the daily and a number of weekly tabloids. None of them was doing any commercial marketing. We did that. Though the market was not mature and there were virtually no commercial advertisements being published, we went on teaching the market the importance of commercial advertisement. Also those who knew the importance of commercial advertisement were hamstrung by the lack of a vehicle for such advertisement. We provided that vehicle for them," he recounts.

But the success of the newspaper venture also caused a downslide in the carpet business. "The newspaper took all our time and we could not pay enough attention", he says. Then why not sell the carpet business? "No way. It is the mother company and we want to retain it," he answers.

Another lesson that Sirohiya shares is that once you are into media business you cannot do anything else because it takes so much time and effort. And once in media, you become immersed in media. "That is why we started FM radio, first with a time slot bought from Radio Nepal and later on our own."