How to build a business

Rajiv Talreja 

By Madushka Balasuriya 

For someone who has started and run four businesses, and is among India’s leading business coaches, Rajiv Talreja is extremely forthcoming about his mistakes.

“In 2014 I told myself as an entrepreneur, I should probably accept that I don’t know how to build a business,” he tells me during our sit-down interview. “And that probably in the eight years as an entrepreneur leading up to then, even though I had the title and tag of an entrepreneur, I realised I didn’t have the capabilities of an entrepreneur.”

If I take money and give that money to someone who does not have the knowhow to a build a business, no matter how much money I give, that money is going down the drain. Money is a very minuscule contributor to building a successful business. Before money comes knowhow, the knowledge, the skills, the learning.

What brought upon this bout of strong introspection? Well, for starters, having run those four businesses for several years, in 2012 he went bust. He was $ 110,000 in debt and had to shut two of his businesses down, while his dad too went into debt. Talreja’s proverbial rug was being pulled out from under him, so he did what many of us would have done – he looked for a quick fix.

“From 2012 to 2014 I explored every shortcut in the book, because when you’re desperate for money you become an opportunistic. So I made that mistake for two years. Someone told me to go into the real estate business, facilitate joint venture deals, and that I’d make fast money – eight months later I had left my core business and I was doing real estate. 

“Then someone told me to get into scrap trading copper wires, register yourself on online portals, go to ports, talk to people – so I did that. Only to realise the shortest cut is to take no shortcuts.”

It was at this point that he came to the conclusion that, despite being an entrepreneur for nearly a decade, he really didn’t know much about actually being one. So he did what any driven, introspective go getter would do – he set forth on a path of learning.

On his journey he interviewed over 300 of India’s foremost business leaders and CEOs across all sectors, an exercise in personal growth and learning which eventually turned into a complete game changer for his life.

“No matter what sector you’re in the rules of building a scalable business are the same. So I learned these rules, and translated them through the process of writing a book, and then launched the book.”

If I’m an entrepreneur that wants to be protected by my Government, is waiting for Government grants at every step of my business, and because that makes my life easy, then obviously I’m going to swing towards the most socialist side of how things should be done. But if I’m an entrepreneur who’s driven by growth and has the passion to innovate and create, and I need the global market to look at me seriously and my country seriously then I want the proactiveness to be there.

That book opened several doors for Talreja – to some of the biggest brands in the country, and to meet the founders of these brands and learn from them. Titled ‘Lead or Bleed’, it hit the Amazon best seller chart within two weeks of launch, but more importantly it resulted in more and more people calling him to help implement business plans, thus allowing him to share his knowledge. Today he has 23 full-time business coaches working with him in this endeavour.

“My victory was in just getting the interviews, the book was just value addition for me. I thought let me turn this research into a book so that others can read and benefit.”

It was therefore quite the coup for Sri Lanka when Talreja was in the country twice over the space of a month to speak to the country’s budding entrepreneurs, most recently in November for his ‘Business Breakthrough Seminar’.

In an interview with the Daily FT during one of his visits, he shared, among other things, some key insights for any entrepreneur looking to consolidate their business, as well as the Government’s role in enabling these individuals and businesses.

People who don’t build scalable businesses are control freaks who want to do everything by themselves.

The role of Government

While some 75% of all Sri Lankan enterprises are categorised as SMEs according to the Ministry of Industry and Commerce, the country still lags behind in relation to its regional neighbours when it comes to entrepreneurship.

In Vietnam, 19.6% of the working population are business owners or employers, while in Thailand, this number is even higher, at 27.5%. Countries with higher populations such as Bangladesh and China report 11.6% and 7.5% respectively, which correlates to a fairly large number in totality.

In countries with populations equal to Sri Lanka, the rate remains at a steady 10%. Sri Lanka by comparison has approximately 230,000 employers or business owners, which is about 2.8% of the total working population. As such it’s clear that the country dearly needs to increase the number of entrepreneurs in the country to realistically compete in the global economy and achieve its touted growth targets.

Putting aside briefly the rhetoric that has stemmed from the country’s recent political malaise, an objective look will find that the Sirisena-Wickremesinghe Government did indeed put in place measures to help Sri Lanka on its way to becoming an export-based economy. One such initiative being Enterprise Sri Lanka.

Proposed as a means of helping Sri Lankans kick-start their entrepreneurial ambitions, it provided SMEs (small and medium-sized enterprises) concessionary loans with extremely favourable repayment schemes, where significant portions of interest repayments – ranging from 25% to a full 100% – were undertaken by the Government.

However initiatives such as this, while undoubtedly a part of the solution, tended to fall short when it came to providing individuals with the necessary training and know-how to get their businesses off the ground.

“If I take money and give that money to someone who does not have the knowhow to a build a business, no matter how much money I give, that money is going down the drain. Money is a very minuscule contributor to building a successful business. Before money comes knowhow, the knowledge, the skills, the learning,” explains Talreja.

“I say this even to entrepreneurs, debt is poison. If I’m borrowing money and putting it in a business which is already not making money, guess what? The problem is not the lack of money. The problem is lack of strategy, system and skill. And that’s what happens with most of these Government initiatives.”

Talreja suggests that if the Government is to be serious about an initiative such as Enterprise Sri Lanka, along with providing the aforementioned knowhow and skillset to entrepreneurs on how to utilise their financing, it also needs to create an exclusive market place for such entrepreneurs – one showcasing those that have been birthed by system.

“Investment TV shows like The Shark Tanks of the world are doing well purely because it’s not just money; there’s skin in the game, there’s knowhow, there’s network access. 

“The Government can do much more, where instead of just giving away money, they invest that money in creating an ecosystem of experts who can handhold these businesses. Or spend on the marketing reach of these businesses so that most people are proud of buying products from these businesses.”

“In India if a manufacturing company has taken use of the Made in India scheme, many companies are highlighting that as a reason for people to use their product. A sense of pride in the consumer, as opposed to buying from a foreign manufacturer.”

The importance of branding

These ideas and schemes, however, would be for nought if the relevant stakeholders as well as the general public were unaware of them. This is, he explains, is a key reason as to why many Government initiatives fall short.

In India, for example, Prime Minister Narendra Modi has taken a supremely proactive approach to promoting startups through his ‘Startup India, Standup India’ movement. Manufacturing meanwhile has returned to the country through the ‘Make in India’ scheme. But, while Modi is getting the credit, the ideas and schemes themselves precede him – it’s just that he made people more aware of them.

“Have these schemes been there in previous governments? Yes they have. What Narendra Modi has been successful in doing is branding it, marketing it, making these schemes a household name. So I think where most governments fail in implementation is reach and marketability, not really time for them to kick in. It’s more about whether the government is a good storyteller to attract the imagination of the people, to get them to rally behind the policies.

Alongside branding, the other key element in terms of ensuring these policy initiatives reach the right people, is the elimination of bureaucracy. 

“The more doors someone has to knock, the more filtration of the benefits to people. And that’s quite unfortunate. I know people who look at government jobs not because of the salary, but because of the scheme that particular department in the government has, and they can find their own twisted ways of deriving benefits out of it.”

“I always ask entrepreneurs to see how they can be independent of the environment. If the ecosystem and environment is providing you support, great, take it. But don’t build your business around that ecosystem. Because if today a government changes or policy changes, businesses go out of business if they’re so dependent on that.”

The mistake that SMEs make, is that they don’t look at building teams because they look at hiring as an expense, and instead do things by themselves. The moment you do that you’re not going to build a scalable business, you’re landing yourself in the trap of self-employment.

The dangers of protectionism 

When we spoke with Talreja, the country’s constitutional crisis had just unfolded. And among the first moves of the Sirisena-Rajapaksa Government had been to revert to a more protectionist outlook.

For Talreja, while he was not interested in passing judgment on the country’s politics – as he says, macroeconomic changes don’t necessarily impact SMEs to a great deal – he was still willing to share his opinion on the long-term ills of protectionist thinking and policymaking.

“I personally am not a fan of entitlement and protectionism, purely from the point of view that it kills merit, that it makes people lazy. I’m someone for an open and a free market probably because then merit gets a playground to play. Having said that, it’s how every entrepreneur then perceives it. 

“If I’m an entrepreneur that wants to be protected by my Government, is waiting for Government grants at every step of my business, and because that makes my life easy, then obviously I’m going to swing towards the most socialist side of how things should be done. But if I’m an entrepreneur who’s driven by growth and has the passion to innovate and create, and I need the global market to look at me seriously and my country seriously then I want the proactiveness to be there.”

When I suggest to him that different industries may need a slightly different approach, such as agriculture – one of the primary sectors in Sri Lanka that is always on the look-out for Government assistance – Talreja insists it is still not a viable strategy in the long run.

“While protectionism can be held on for a certain period of time, I think the role the Government should play is modernisation. Don’t just create entitlement saying: ‘We’re not going to allow anybody to come in,’ but empower that community with the latest standards, training, knowhow, and technologies, so that the industry can match global standards. 

“Which is great because then you can take that produce and product overseas and say our benchmarking is this high. This is where probably a large part of Asia gets it wrong, that we rather prefer being protected than empowered.”

He draws parallels to India in the late 80s, where the country failed to encourage foreign investment, and instead remained in a comfort zone protecting its farmers and local brands.

“If you look at India pre-1991, pre liberalisation and globalisation, it was the same mindset that we don’t encourage foreign investment, we sit in our comfort zone and just protect our farmers, we protect our local brands, but look at the automobile industry in India, look at the telecom industry, when the market was opened up the consumer benefited, the consumer won. 

“So when the consumer wins, the standard of living wins, when this happens standard of expectation and desire wins. Progress any day needs to be put ahead of protection.”

Advice to SMEs

Changing focus from the role of Government, to the initiatives that SMEs and entrepreneurs themselves can take to traverse the web of bureaucracy in front of them, Talreja says the best piece of advice he can give is to avoid the desire to be perfect.

“If you have an idea don’t wait too long for validation on whether it will work or not. The only way to figure it out is to go out there and implement it. I’ve always believed that the need for perfection, the desire to get it right, only creates mediocrity. Because it keeps you in your comfort zone and looking for external validation.

“But if you look at the pattern of success, success is always shabby. You gotta go out there, get your hands dirty, and then get it right. If you have an idea, test it, play with it in the market, and the best validation you will ever receive is from the market. If people are buying great, if people are not buying, figure out why and do something about it. 

“We’re in the best time possible to do business. Because the information is so open out there, anything in business can be learnt.”

But in the end, for Talreja, if you want to effectively scale a business there are three things an entrepreneur should focus on: Building teams, building systems, and building strategies. 

“The mistake that SMEs make, is that they don’t look at building teams because they look at hiring as an expense, and instead do things by themselves. The moment you do that you’re not going to build a scalable business, you’re landing yourself in the trap of self-employment.”

“People who don’t build scalable businesses are control freaks who want to do everything by themselves.”

“SMEs also don’t believe in building systems because they think: ‘We’re too small, we’ll build the systems when we grow big’. I say it’s the other way around – to grow big you need to build a system. Systems are again critical to make it scalable, otherwise you’re always in crisis mode, you’re always firefighting, and eventually it’s all about what makes you standout. 

“And finally, what’s your differentiating strategy? This an important question for business to answer, and you have to keep looking to find it. Once you find it, and you see it working, stick to it.”

Pic by Lasantha Kumara