Today,  TiE Chennai, had started a 12-week workshop on “Finance for Entrepreneurs” to expose, familiarise, and, educate entrepreneurs on the basics of financials. While a promoter needs to be aware of most of the areas in her business, knowing the basics of finance and accounting is a must. The workshop is being conducted by seasoned professionals in the field including Mr M.S.Jagan, Mr Kannan Ramanathan and Ms Aparna Rammohan.

Financial Literacy for Business Owners - TiE Chennai

Financial Literacy for Business Owners – TiE Chennai

The organizers from TiE had invited me to be the intro speaker to share my experiences. I listed the following four costly mistakes I did in my business due to my lack of finance / accounting / taxes in my early days and how I see the workshop to be useful for the participants:

  1. Not understanding the importance of free cash flow – for a new office building in 2003, I did the entire infrastructure spend from accruals and monthly revenue, this made miss what could have been a lucrative expansion opportunity.
  2. Trying to be over-cautious or over-smart by taking Foreign Exchange hedging (USD to INR) for the entire expected revenue for one full year in 2007/2008. When the US recession hit, it knocked down nearly 80% of the dollar income and I ended up paying for the dollars I was unable to give the bank.
  3. Relying entirely on the auditors for Tax issues. Every CEO has to have a basic awareness or take the effort to learn about the taxes that are applicable (or changed in the recent budget of Government of India) to his business activities. I had a TDS (Withholding tax) case pending with the Income Tax department for over a decade – I have written about this in section 7 of the post “Future of IT Outsourcing Industry”.
  4. Lack of knowledge on global businesses – In those days (around 1998-2003) payments from American clients was by paper cheques, which used to take about 15 days to come to India, after depositing in my bank in India, it will take another 30-45 days for the money to get credited in my account. By chance, a banker gave me the idea to open a branch/start a subsidiary in the USA to minimize the time – opening a subsidiary in the USA helped me in many other ways too, I wish I did it a few years earlier so that it could’ve helped in my sales as well.
Speaking on the mistakes I did in my business due to my lack of finance / accounting / taxes

Speaking on the mistakes I did in my business due to my lack of finance / accounting / taxes

The audience who were all entrepreneurs and senior managers (hopefully) liking my brief talk

The audience who were all entrepreneurs and senior managers (hopefully) liking my brief talk

On the sidelines of the program, I had the privilege of meeting and taking a selfie with the famous Dr Ashok Jhunjhunwala of IIT Madras along with my fellow charter members of TiE Chennai – Mr MS Jagan and Ms Aparna Sridhar.

Dr Ashok Jhunjhunwala of IIT Madras, MS Jagan and Ms Aparna Sridhar.

Venkatarangan, Dr Ashok Jhunjhunwala of IIT Madras, MS Jagan and Ms Aparna Sridhar.

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