Friday, May 17, 2013

Lemonade to Viagra - An Entrepreneur's dilemma

If your lemonade does not sell, would you switch to selling Viagra?

Even more if you are passionate about making a lemonade.

I recently had an interesting conversation on Twitter with a friend on an important aspect of entrepreneurship. It all started with a thought

Me: Sometimes I feel entrepreneurs have a misplaced sense of objective especially when it comes to making money versus doing what they love.
Friend: When bills pile, passion vanishes.
Me: Test of an entrepreneur's passion is in d face of piling bills. Just as test of man's character is in d face of adversity.
Friend: True that!

This also brought me back to an old conversation with a friend who had ventured out on his own. It was about the journey from passion to returns on investment

November 11, 2012
I recently had a chat with my friend who left his job to start his own venture. His venture is doing very well. It started as a passion but in my last talk to him, I heard the word ROI. He says that for every simple decision we make, we look at ROI and its role in sustenance. It has not been smooth sailing for him, but the important question is ROI. If an entrepreneur is into a venture since it has been a passion, what is the primary goal of the venture - Generate returns or do good work?

 For many startups cash flows are a big problem. Most don't survive due to this problem. Many budding entrepreneurs today are limited by cash flows. VCs are not the best bet in such situations. It is your own practical thinking and here is why the ROI focus becomes important. Passion on one hand is focus on the value proposition while ROI is sustenance. 

It is like a canon on a ship with the canon (passion) delivering the power and the ship (ROI) taking it to distant shores. If there are leaks in the ship, it is highly likely that a great canon will sink. ROI focus and initial number crunching is as important as the value proposition. Great ideas need great ships to carry them.