Architecting, Growing and Transforming: The Second Beginning
Starting from 1970 till 1995, he ran the financial share fund with utmost dedication, perfection and perseverance. However, he did run in to some bad decisions. Some people defaulted and did not repay the loans. It was those times in life when personal relationships took advantage of him and tried to manipulate him. However, though it brought in a momentary setback it helped him learn many more lessons. So, what else is called “Learning by Mistake”?
Synthesis: Any entrepreneurial activity will go through many TESTING TIMES, both professionally and personally. In those times, it is about standing tall and weathering the storm, pulling up all your strengths to resist and fight it.
Years passed by and in 1995 he realized that he could transform the model to scale up. He had built enough reputation in and outside his friends and colleagues circles. He also saw an opportunity to reposition his venture as a Chit Fund business. It was because, at the same time, many chit funds failed to deliver results and defaulted to its investors and there were investors in search of well managed and trustable funds. He had also garnered strong experience in running and perfecting the business along with building many supporters and well-wishers. The timing was ripe and the doors were open, Yet Again!
In the fall of 1995, few years before his retirement he started Friends Cooperative Chit Fund, thereby discontinuing the so far successfully run share fund. He started this venture along with two other knowledgeable and well-connected individuals, one a friend and the other a relative. The fund, as in its name, consisted of a closed group of members who were closely known to at least one the three and hence created a strong network of people forming a fund with very low risk.
The strategic partnership with two other owners helped bring in more investors to the fund and at the same time retain the culture and philosophy of having a set of investors whom the owners personally knew. It ensured that the increasing in scale did not bring in increase in risk.
Synthesis: You need to have a GREAT TEAM which shares the same passion and vision along with also bringing in different perspectives to the table. Just because he/she was your best friend, colleague, or a relative does not mean that you need to have him in the team.
What happened later to 1995 is a revered story in his locality and among his friends and relatives circles. The chit fund has continually created value for all its investors and owners. Investors flock in for its membership each time a new chit begins and has been oversubscribed every single time. There have been many instances where investors submit the first chit amount many months early to ensure subscription to the chit fund, an example of how strong investors believe and trust it for increasing their value of investments.
Talking to the entrepreneur, an investor was found mentioning, “Sir, It is because of you that I have been able to own a site, house and property. If not, I may have not been able to make all of these”
Our entrepreneur feels humbly proud of this, that he was able to help people in increasing their investment values and in also helping many others in getting loans when they needed the most.
Synthesis: You need to CREATE VALUE for yourself and ALL stake holders.
The turnover of the venture has grown from a mere INR 20,000 to the current INR 1,600,000 value per month. In terms of Compounded Growth Rate it has achieved an astounding growth rate of 31.51%.
Our entrepreneur now, after retirement from his full time job 10 years back, continues to run the chit fund full time along with his two other owners. He has a clear strategy of not scaling it any further and to only sustain and maintain the existing numbers.
Failure in Pure Finance Venture:
In the recent past, around eight years back, he started a finance company bringing in two additional owners, along with current three, whom he knew close and well enough. This company ran independently and did not have any relation to the chit fund that he already ran. It was a different business model where in equal seed money from the five owners was loaned out to people. The people who availed loan came in with reference from any of the 5 owners and the qualification to a loan was based on the trustworthiness of the individual and the strength of reference from the owners. However, due to the dilution of ownership to five members along with several other socio-economic factors, the firm ran in to many defaulters and subsequent legal battles. It was hence a failure and he decided to dismiss the firm after realizing that it is running in to too many issues.
When asked about the failure of the firm, he described that it was a high risk business and that he soon realized that it did not align well with the values he ran his chit fund business. This new entity also demanded more legal and administrative work that he was not equipped with. He mentioned that he did step in to this venture with an open approach of testing the waters and he was not hesitant in pulling it down for the right reasons.
Synthesis: Do NOT be too EMOTIONAL about your idea/business. Most ideas/businesses are hugely influenced by many environmental factors such as social, timing, competition, cost and many others. YOU NEED to know when the business is no more viable and to decide when to phase out.
Synthesis:
Our entrepreneur undertook the entrepreneurial activity in the perspective of creation of wealth, change, value and growth, however, not in the perspective of creation of enterprise or employment. The calculative risk appetite along with the environmental factors and opportunities helped him conceive the startup though he had no prior sector specific experience. It could also be seen that he later evolved his business model from being a share fund to a chit fund contemplating increased opportunity for value creation.
His was a process of continuous pursuit of opportunity. Starting with the bun selling and freelance electrical business, the entrepreneur moved on to a totally different business line, a purely financial undertaking. It epitomizes the fact that the entrepreneur was driven by outside in (seeking opportunity based on market demand and scope) approach rather than an inside out (seeking opportunity based on internal or personal capabilities) approach.
Our entrepreneur was driven by the hunger to achieve, to excel and to create economic value. His careful and strategic approaches such as (1) selecting investors, (2) than making investors come to him, (3) testing the waters and starting small approach, (4) evolving his business model when the opportunity arose, (5) ready to fallback as in the case of pure play finance venture and (5) partnering to reduce risk, are the factors that were some of the primary factors of his success. Though he did not have any well laid out long term plan he was strategic and clear on his business objectives and targets.
Starting with no prior knowledge and experience our entrepreneur created a chit fund empire in his locality. Though it is not a million dollar business it is a business that embodies the characteristics of entrepreneurship and the true inspiring spirit of an entrepreneur. This story I believe sheds lights and proves the fact that an entrepreneur can originate and be influenced from circumstances within and external. It is dependent on a multitude of factors but primarily by the urge and hunger of the entrepreneur.
“Some people dream of great accomplishments, while others stay awake and do them”, Anonymous
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It is very nice story of your own. Nobody can stop a person to grow from any level to ANY level.
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