PPESA regularly conducts seminars for local professionals. A recently concluded event was on the highly interesting topic of Why Start a Business? The speaker, Mr Noor U. Haq, is a well known
entrepreneur who has founded several companies.


The seminar consisted of a Networking session from 6 to 7 p.m. followed by the presentation from 7 to 9. There were over 90 attendees in the Networking part of the event. The participants were provided with badges and requested to introduce themselves with their names and affiliations. Within a short time a number of discussions were sparked and one could notice that everyone was involved and busy in networking. At 7:15 PM the guest speaker began his talk. A highly interactive format was adopted and the audience raised a number of very interesting questions. The talk lasted over an hour. Mr. Noor Ul Haq was extremely articulate and responded to questions with great clarity and precision. The talk ended at almost 8:25 PM.


Here is the text of what Mr. Haq spoke about as well as some of the interesting questions that were raised at this event. Chowk welcomes your comments on this seminar. Use the InterAct! form below to raise questions, log concerns, and to exchange your ideas about entrepreneurship.

Starting a Business

by

Noor Ul Haq

President of Semiconductor Tapes & Materials (STM)

President of Grinding & Dicing Services Inc. (GDSI)

President of SMS (Process Chemistry)



When Ms. Yasmin Javed (Vice President of PPESA) called
me a few weeks ago and requested that I step forward and deliver a speech
for the PPESA forum on the subject, " Why start a business?",
my answer was abrupt and quick, "to get rich ." Having known
Yasmin for over twenty years, I accepted her invitation with some reservations.
Most of these reservations included a tug of war between setting aside
the time to sit in front of the computer for a 200 word write up on running
a business versus playing tennis or a game of golf. Having chosen the former,
and after much reflection, I can now say that starting a business entails
far more important objectives than getting rich.

The main reasons for starting a business include:

Feeling good by achieving goals, providing ones family with financial security, the opportunity to serve others and attaining a sense of leadership, control and authority.


What type of person should start a business?


Someone with high dreams and aspirations, who does not accept failures easily, who works tirelessly and is willing to burn the midnight oil and who is more than willing to lead others.

In an effort to make getting started a bit easier, I have defined Seven Steps to Success.


Step One includes Defining a Market and Choosing a Product


In order to start a business, you must understand your market and then choose the best fit product that you will either develop or acquire to sell. Make sure you do your homework. Simple and precise research will provide a better understanding of barriers to entry. It is important to go into a growing market. If you decide to start a business where the market is declining, you will either close your doors before ever making the first sale or run out of your life savings! Next, decide which product and/or services are needed by the customer. You may have a product which is one of a kind, innovative, and competition-foolproof but it may not be needed by the customer. This type of product will never sell. Once again, I reiterate that is important to understand the market/customers' needs. If the market is in dire need of a product/service and your product is a "me-too" type then you will definitely realize a sale and bring in the much needed cash flow to finance growth.


Step Two reminds entrepreneurs to Keep at Least Two Years Finances


Do your homework. Take a sheet of paper andwrite
down your fixed and variable costs of living. There are very few businesses
who start showing a turn around in less than two years. Therefore it is
imperative that you should have a minimum of two years expenses in the
bank in case your business does not turn profits and you have trouble supporting
your salary. Minimize your expenses. Sell those expensive cars. Reduce
your credit card payments, cut down on eating out or any other luxuries.
Do not worry, you can enjoy those things as soon as your business starts
growing and hefty profits are commonplace.


Step Three requires that one make a simple P&L Statement and Balance Sheet


Begin with writing your fixed costs. Fixed costs
including building rent, furniture, fixtures and equipment. Never underestimate
expenses. One good rule of thumb is to always add 50% more than what you
estimate. Do not rent fancy buildings, nor buy any fancy furniture. Start
small and grow from the profits and cash flow. Remember, "liquidity
is richness". Be real and stay simple. The customer does not care
about your fancy appearance. The customer only cares about performance,
service and cost. As long as these three things hold true, no matter how
simple or small your company is, the customer will not be able to live
without your product. They will pay to buy your product! When filling in
the sales column, always be conservative. If you think you can sell $1000.00
per month, your actual sales will be $500.00. Therefore make your projections
as conservative as possible. If you end up doing better, it will only make
you look stronger in front of the bank and banks love conservative spenders.


Step Four stresses the importance of Building a Team


It is very important to build the right team.
No one can succeed alone. The most difficult task when forming your team
is to place trust in others. You have only two hands and two legs and there
is only so much you can do in an eight hour day. Surround yourself with
well qualified people. In a new business you can not afford to train people.
You need at least three people to start a new business. They must
have an extensive background and experience in the type of business you
are starting. They should hold impressive resumes. If you attach yourself
with "me-too" type of people, you will have a great deal of difficulty
with taking your company off the ground as well as raising money later
on for expansion and growth.


Step Five is a reminder to Not be Greedy

Many small business entrepreneurs can't even get
started because they get tangled in lengthy disputes over ownership. Develop
an attitude of generosity. As long as you earn a good living (which includes
becoming a millionaire), you should not worry about others.


Step Six stresses the importance of Hiring an Attorney

It is difficult when you are struggling to save
every penny to pay for legal fees. But it is imperative. No matter how
expensive it may sound, hire yourself a good attorney. Make sure you ask
around and check up on credentials. Always have a written and binding agreement
with business partners. This will eliminated all future confusions and
misunderstandings.


Step Seven calls for Fairness and Honesty

You must be fair and honest with all business
partners, customers and employees. This job is very difficult and you may
come across lots of people who think different than you or whose expectations
are different. You will always succeed if you are honest with everyone
you deal with.



The post talk QA session began with questions that covered a spectrum of associated issues and the discussion moved from issue to issue. Some of the questions (approximations) are listed for our readers. We hope that this will give everyone an idea of the informative nature of the seminar.


1. Why should one leave a highly paid job in a large corporation to start a business?

2. Should one juggle a job and business at the same time?

3. What are the elements of making the P&L statement of a start-up?

4. What should one look for in a partner?

5. What should one do if they have an idea for launching a business and are still working in a company?

6. Is it necessary to have 2 years worth of expenses before starting out?

7. What is teamwork in a start-up?

8. How does a start-up compete with larger companies in making a sale?

9. How much work does it really take?

10. Where does ambition turn to greed?

11. Is the only reason to start a business the hope of getting rich quick?

12. What are the mistakes that start-ups make, and how to avoid them?

13. Why is an attorney important?

14. How important is business school in grooming an entrepreneur?

15. What is the difference in the clout one has by being a high powered
executive in corporate America and an owner of a small business?