Audience Asks

There is always a dilemma regarding the duration of my investments. I want to have some clarity on this.

What is important here is to try to map your investment vehicle to the time horizon. For example, my son is in the 10th standard and he has a higher education corpus outflow which will be coming in another 2-3 years’ time, so this time frame is very small to put your money in equity. So this rules out the equity option and you would want to park it into a fixed deposit or a bond fund. But if your time horizon is on the higher side, then drawing a timeline becomes essential and these are the major outflows. There cannot be one template that fits all, depending upon factors like your balance sheet, lifestyle.

There is so much information on the internet regarding investments, wealth management, financial needs, etc. and it is usually very confusing. How do you suggest that one can refine this information and make the most out of it?

I would explain it with something like cricket, everybody understands and follows cricket. So at the start of Sachin’s career he had a coach, Mr. Achrekar, who could probably guide him. Similarly, when you start playing in the investment world, it is best to have somebody as an expert, could be from family, a chartered accountant, an advisor, or a mutual fund distributor. There are a lot of products but not necessarily all these products will suit you. So avoid the noise, avoid the information overload, get an expert in the initial 5-10 years, get into simpler products that you understand, and get into a vehicle that you know how to drive and know how to fix.

Keep tabs on business’s money-generating abilities

The ultimate goal of entrepreneurs is to convert sources of business wealth into personal wealth. Therefore, to conduct weekly and monthly check-ups on finances to ensure that one is reaching pre-defined goals. Taking stock of one’s expenses, income, employee hiring costs, and contractor fees is to make sure that business is working for the owner and not for other people.

Be smart about loans

In order to avoid the debt trap, do not overburden yourself with loans that are not essential to run the business, so avoid loans that are not adding to your sales directly or indirectly, and the pandemic has already taught us the importance of debt-free and economical life.

Time Is Money

An entrepreneur has to make sure that the time he/she spends is monetized properly, spending time in marketing or branding activities only or doing real business, needs to be prioritized. It should all result in a real money-making business immediately or sooner than later. Business means profit through legit sources.

Make a will

Making a will before tax implications could leave the entrepreneur’s legal heirs and beneficiaries exposed to tax liabilities that could leave them next to nothing from the total value of assets. So, solid functional estate planning needs to be done.

Tax benefits

One has to separate personal and business finances for greater tax benefits, the ability to take advantage of tax deductions is a huge plus for entrepreneurs. Keeping accurate records of personal and business expenses will assist in the event of a tax audit, keeping a check will ward off the tax guys.

Studentpreneurs and Scope

Mumbai’s Tilak Mehta was 13 when his company Papers N Parcels in order to ease courier services in Mumbai. What separates Mehta from his fellow mates who attended the same class 8 at a suburban school like him was his vision to innovate and understand the scope of his logistics start-up. He understood at a young age that scope for young entrepreneurship is immense in the Indian market. Sure, just like any other entrepreneurship, one would need skills like opportunity recognition, innovation, team work, persistence and leadership qualities. There is a unique advantage of being a studentpreneur: the time and the ability to take more risks. Having started earlier is something that most mature entrepreneur’s regret. Stakes for studentpreneurs are comparatively lower. They can experiment with starting something on the side while they’re still in college. Internship is also touted to be a great way to begin. Students can consider that as an entry point into the real world. 

Certain kinds of ideas like the ones that address a pain point of a local population will have a higher chance of success. Initially, students can explore funding options like crowdsourcing, asking the college authorities/community to help or learn under a mentor in another business. With the Government of India promoting programs like Start-up India and Aatmanirbhar Bharat, it’s good news for young Indian entrepreneurs interested in taking their ideas forward. The center has already released Rs 85,000 crore to encourage the young population to get into start-ups and boost the economy.

Many private companies, too, have programs to encourage entrepreneurship. FMCG major Nestle India, for example, recently announced an initiative to support entrepreneurs through its kiosk business model called ‘Nestlé Needs Youth’ where they would nurture entrepreneurs and create opportunities for them to operate franchisees under Nescafe, Maggi, KitKat which will be called NESCAFÉ Corner, MAGGI Hotspot and KitKat Break Zone respectively. Many other private companies like Target and Reliance now have full-fledged programs to encourage young entrepreneurs. 

Roadblocks with Studentpreneurs

The Global Entrepreneurship Monitor estimates that around 20% Indians between ages 18 and 64 intend to start a business in the next three years. For a population of more than 135 crore, this percentage should have been a lot bigger. One of the major deterrents in successfully realising the potential India’s young entrepreneurs is the mindset. There is still an unholy focus on tech education and a corporate job across the Indian society. In one of the recent incidents, online education platform WhiteHat Jr sold coding programmes to parents of children as young as 10. Many other platforms followed suit and had programmes called junior MBA for teenagers. While entrepreneurship should be encouraged from a young age but selling it as a property to lure innocent parents will do more harm than good. If Indian students are constantly under academic, financial and social pressure, they will lack the freedom of thought and action to join an ecosystem which is equally challenging. So, lack of support is a crucial issue, as far as Indian parents are concerned.

Another major roadblock is that many Indian schools still lack the basic infrastructure required for quality education. Which is why a majority of students are not aware about entrepreneurship opportunities. Right now, only premier institutes like IITs and IIMs have a conducive environment to nurture their inner entrepreneur. A favourable environment is utmost important to nurture entrepreneurial spirit. Why do you think that American start-ups are mostly founded by students from the same batch or a close-knit peer group? Colleges need to provide enough networking events for students so that they can easily get integrated into the world of start-up. Most colleges still lack the infrastructure and the encouragement required to kickstart the process. Entrepreneurship cells of BITS Pilani, National Institute of Technology, Tiruchirappalli, and IIIT Hyderabad, etc. are considered to be one of the most active in the engineering circuit. However, it’s a positive trend that e-cells are moving beyond IITs and IIMs, but these are mostly restricted to science colleges. There is an immense gap for humanities and other professional fields like law, journalism, bankers, doctors, etc. to start thinking of entrepreneurship as an option.

Studentpreneurs need to inculcate a feeling of being comfortable with failure as it is part and parcel of being in the start-up culture. Schools and colleges need to make a change in their mindset that failure might not be a bad thing. Only then will students be encouraged to experiment. Almost every successful start-up founder today has a trail of failed companies and regretful ideas but they would still swear by it. Studentpreneurs need to learn that failure is hardly a disappointing end but rather a new lesson in the process. Codeacademy’s founder Zach Sims’ first failed product was a company called ComeRecruit.us that matched students to potential companies they would want to work at. It didn’t do well but that didn’t stop him from giving a much bigger thrust while launching his next one. Many entrepreneurs say that starting a company during their studies was one of the best decisions they took. That is because it not only helps in one’s development as a young professional but also makes them future-ready to be comfortable with the road not taken.