My Journey as an Entrepreneur – Meyyappan Annamalai (E&I)

Abstract

This paper takes through the life journey of a “forced” entrepreneur whereby it provides events to describe the challenges and opportunities faced. The paper is based on real experiences on the ground. The author tries to break the business journey of an entrepreneur into a few stages (Initial stage, Growth Stage and Exit stage) and covers the important events happened during these stages, lessons learnt and points to remember in each stage. The reader can co-relate this to his existing or future journey and the paper can provoke interest to adhere the experiences and thought process.

Introduction: A Case Study

I, Meyyappan Annamalai (Mey) would like to take this opportunity to run through a few important stages of professional cum business career which might help the budding entrepreneurs when they plan to get on the business bandwagon.

I plan to support the main presentation with incidents and actual examples which could be the right takeaway for the participants.

SCONCE – A 12 year on-going journey.

1990 – 2001 – Happy, comfortable, safe (sort of), easy going life

Graduated in 1989 and took a trainee role from 1990 to 1991 and then an employee role till 2001. Changed two organizations during this period and the employee role was quite comfortable with easy going office timings, less commitments, no pressure/stress, on the dot salary, time to enjoy the world and more importantly learn the domain in my own pace. Except for the money part, all seemed to be good and job was kind of safe when the bullet hit in 2001-> RETRENCHMENT!

2001 to 2003 – Retrenchment, Anxiety, Fear, No Prior experience, No financial backup, dot.com bubble burst

I had an extensive and very specialized CAD background and new opportunities in this field were very limited in Singapore. So had to take an alternative choice. As my wife was working, we felt we can financially manage for a few months and she encouraged me to do something different from what I was doing till then (family understanding and support). So convinced and roped in two of my colleagues who were together from the trainee days (a strong team) and did some scouting, felt that project/opportunity based software development was the potential way to go since we had all what was required for the job (no financial backup, no major capital, had the required domain expertise, had the required Enterprise R&D knowledge ^J )

The first year was challenging since we did not take any salaries, and had to keep all the financial commitments as low as possible. Also we had to source for any type of software project on any type of platform development (Unix, windows, C++, C, PLM(Product lifecycle management), Java (you name it) After a year we could stabilize on PLM/CAD software development which was our forte.

How did we address the initial challenges?

No financial backup -> Not required for this type of business, since this mainly depends on your domain expertise and we anyways had no capital or networking backup for the startup. You just need minimum capital, which can come from your own savings, and a home office, laptop, with good connectivity to the net. In year two we were able to get a small space which can hold 5 guys and we had a few projects on the way. So we started to build capital rather than go out to raise capital. The advantage of services consulting business is that your expertise and knowledge is the capital. The major issue was with the billing/receivables, which is a challenging task and mostly customers would have advantageous payment terms which affects your monthly payments during the initial stages.

Fear/Anxiety -> This is one critical area where you need to have some risk-taking DNA flowing in your blood. You cannot avoid risk, but be strong to be able to manage this. Keep you fear internal and keep your mind occupied with job/new developments etc, which can divert the fear. Keep meeting people since that’s a way to tap into ideas and opportunities. Have some financial backup (personal which should not be spent on the business) which can last 12 months (such as savings, spouse working etc.) which shall reduce the anxiety within the family.

Domain Expertise -> This is the key for success. My suggestion is that you need a min of 5 years solid domain expertise before you get into any business. You may have exceptions where you have a strong financial background or if your parents/relatives/friends are already in the business and be able to absorb you into the business domain. So during your employment days, just be ready to take up any job given by the organization and choose to be in smaller organizations where you have the opportunity to learn more and have bigger responsibilities.

2004 – 2008 – Stabilize, Expansion, new geographies, new ideas, risk management

After the initial few years, we felt that PLM was a limited growth area and we wanted to pursue our passion, which is product development. We created two products which we sold to OEMs (Original Equipment Manufactures) but since we did not have a strong selling strategy we did not capitalize on the success.

How did we address these challenges?

Stabilize – > we had created a name in the market space
-> “If there are complex plm /cad requirements, then look for SCONCE”. So, word of mouth and successful completion of projects with the motto

“Customer is King” took us through stabilization, but did not allow us to grow.

Growth/Expansion – > Bringing in talent and partnering with the right resources will help you to grow. We were technically strong, but not so good on sales, so we looked around and partnered with strong sales and strategy experts to overcome this. With the new influx of sales into the company we were able to grow into different geographies like Japan, Canada and USA and with an MNC base.

New Ideas-> Any business after a period of few years (Stabilization) has to look for new ideas in terms of expanding in the same domain or look for alternative paths to growth. At this stage you should have generated some profits to invest in various alternatives which you should be ready to risk and see if there are rewards. We did explore and felt that we were ready to invest in product development and in engineering services. Our mistake was to expand aggressively on both, which took a toll. We should have concentrated on one line of expansion. We were able to sell the product to the OEMs, but our expansion into Engineering Services cost us heavily, since we had no background knowledge and could not get the right resources to run/manage the business. Major learning is that you should know when to pull the plug and get out to reduce your risks, which we did after 12 months of investment

2009 – 2013 -> Investors, Growth, Plan for Exit

Since now we had a name in the market and had product development ideas for expansion, it was the right time to bring in investors to help us achieve the end goals.

Investors -> You need to tap the right investors at the right time, since the valuation of your company depends on your past success or the innovative ideas which you can sell to the investors. Today’s market is driven by quick return of money where typically investments are done on Consumer software, B2C, whereas we still believe that Enterprise is a strong proposition for investment on a long journey. With new product ideas, we approached ACCEL Partners USA and IIPL Singapore (a govt arm) to support the new idea of shape-based geometry search. We have done about 4 years of R&D and product development and have launched the new product about 12 months ago which has seen initial success with key pilot customers worldwide. So you should know that in order to reach mass, it’s difficult to develop/expand with internal revenue alone, and you should be ready to bring in external parties for your growth plan. This will increase the value of your company even with dilution of your shareholding.

Growth-> we are on the verge of splitting the company into two, based on the lines of business so that each one of them gets treated with proper importance, and each has a business plan and growth strategy.

Plan to Exit-> This is key in any business, and I would suggest it’s not advisable to be too emotionally attached to your business. Be ready to part at the right time. This will help the business to grow as well as provide time for you to re-energize and look for new challenges. We have set our exit targets for 3 years from now and in parallel started to look for new ideas.

Some key take-outs from our experience in the last 12 years:

Initial Stages

• There are no stipulated working hours; it has to be 24X7. You never switch off you mobile phone and should have access to electronic communication.
• Keep your start-up costs to a minimum; create an office in your home.
• There is no place for EGO; let it go.
• The customer is ALWAYS right. (see the antonym down the lines ^J )
• Your family’s support and understanding is absolutely necessary for your success.
• Keep a low profile during your initial stages of development until you are ready to announce your plans and build the business.
• Start with an investment that you can afford (without bank loans) during the initial stages, and don’t cut deeply into your savings.

Growth Stages:

• Build your profits to generate the working capital at the earliest.(lower initial outflow)
• Create a strong network of professionals, customer key contacts, investor contacts to expand.
• The customer is NOT always Right. Initial stages you need the job, but now you are in a stage where you need to convince the customer on what is good for him. So be strong and convince the customer.
• Build a strong management team that you can count on; you can’t do it all yourself.
• Strategize and look for potential investors to come in and allow you to expand the business.
• Make sure that you don’t lose focus on quality during the growth stages.
• Build a brand name through successful deliveries.
• Expand geographically.

Plan for Exit Stages:

• Build the organization to get the right valuations since that is the asset which you have generated over time.
• On exit, take a break and re-energize, and look for potential new ideas during this period.
• Your past experience will help you shorten the time-frame and increase the success rate of your next venture

Conclusion

Planning for each of the stages indicated above vary depending on the stage you are. You may not be able to plan much during the initial stages, but need to improve and stabilize during the growth stage. Your exit planning has to be perfect, since that’s the time when you realize the potential of your hard work done during the journey.

I would like to emphasize that entrepreneur is an opportunity of life time which many of them would not get to enjoy. So provided an opportunity take things as they come, but most importantly execute them with your full involvement and enjoy what you do!!!