Leasing Photocopier and Printers

And now for something totally contradictory... Just leased our first photocopying machine... What did we need

a. Private limited company incorporated
b. Two years of operating history
c. Bank statements for the last six months that showed cash coming in and going out
d. One director's personal guarantee
e. Audited and management accounts for the last one year
f. One very solid and strong reference

Total amount financed - 91,000 PKR. Monthly payment 7,000 PKR. And it will be ours at the end of one year inshahallah. Mujtaba thought it was a little too early for us to go out and buy a new machine but the business case was quite strong. We go through 3 toners a month for our two HP 1300 hundred with each toner costing 3,800. A typical toners runs around 3000 copies. At 9000 copies a month we spend close to 10,800 on toner costs. The new sharp runs at 12,000 copies for 3000 rupee toner. Since the sharp also doubles as a network printer, my toner expense is now down by two third and I am more than happy to pay the savings out as the monthly rental for the next twelve months.

The lease also helps us get the right credit profile since we are now getting bigger every day and would start buying serious equipment. Also applied for a domestic Amex card but that still hasn't come through. Some how their service here is not the same as in the US. Well good things come to those who wait.

Show me the money

I think the bit that I hate the most about "Show me the money, Mr. Investor" is losing control. Even if you bring in an investor with just ten percent, he is still an investor and entitled to his opinions, views and ideas. And if you like being in control then getting some one else in is just one big shouting match waiting to happen.

Been there, done that. Having said that let me add a few qualifications. Every now and then you will find people who are not interested in making money off you but just want to do something for you... You can't judge or guage that sentiment since most people you meet will tell you that that is want they want to do... In my limited experience, only family and sometimes friends are that sincere, every one else fakes it.

So if you need money, how do you get it... Earn it. Every one penny of revenue you bring in is your and has no strings attached except for the fact that you have to work for it. It will be the fastest way for you to raise cash and its cash you can keep.

The "I have no money mindset"

Every now and then a friend or client asks me about how to get his business running without any money. Bongeek asked me yesterday on how he even had a hope of doing something without raising ten to fifteen thousand dollars.

Here is my take on the "I have no money" mindset

If you have a job

a. Capital. Put aside ten to fifteen percent a month and within six months you will have enough for a seed fund. How do you put aside ten to fifteen percent a month on a tight budget. Get rid of your discretionary expenses - stop watching movies, eating popcorn, drinking soda, smoking cigarettes, buying gifts for yourself or your loved ones or in desparate situation even food. I have lived for six weeks on raisan bread and butter so that I could pay off a part of my startup credit card debts. When you put your mind to it, you would be surprised how much you can put aside within the short span of a year. In a given month you do spend fifteen to twenty percent of your paycheck on these items and if you want your venture bad enough you shouldn't have too much of a problem making these sacrificies.

b. Time. For most technology ventures the first and most crucial milestone is the proof of concept. If you are a programmer stop sleeping less and working more. If you can put aside an hour every day and a day on weekends, you get two full days a week, 104 days in a year. That is 4 months of programming time.

c. Focus. Make the time count. You must be focused on an approach that will get you to revenues fastest. Don't build anything grand or esoteric, build something that can sell and add to your seed fund or help you meet your cash requirements. You would be surprised at how much money is floating around the business idea you have fallen in love with. Look around hard enough and you will find something that you can sell within a month. If you are in love with blue tooth, sell your blue tooth library of functions for a few dollars. There is your first product. If you don't have a library, write a 30 page ebook on working with blue tooth and sell it on ebay or amazon. If you don't even want to do that, get a blog, post your code and make money through your google adsense account. Teach a class on blue tooth at a local institute or run it online. You need to be a little creative and the money will find you. Rather than focusing on raising money, your focus must be on the path that will start the cash coming in fastest.

d. Misc. Only you know the real potential of the market you see. Every body will discourage you and tell you that you are either wasting your time or taking too much of a gamble. Assume that there is no support group and you will have to do it all alone. If you stay with it long enough it will come together as long as you are in a business where you can make money. If you feel that you can't (make money) then drop it but never ever take any one elses word for it. What is the worst that I can happen. You will fail and will have a few thousand dollars in credit card debt. When that happens go full circle to point (a) to the raisen bread and butter diet and you will be fine. It is actually quite filling when you get used to it and throw in a jar of blue berry jam.

If you don't have a job - Just remove the part of point (a) where I talk about putting aside 10% - 15% of your paycheck. Every thing else (a, b, c & d) still applies.

On a more serious note

Well that is exactly what happened. The first six months were difficult and very busy as I spent more and more time in getting the essentials sorted out

1. Business Cards - needed a logo and a printer. Found the printer first, the logo took a long time to get done given how strongly a felt about the image I wanted to put up for my firm. For address and phone numbers used home numbers initially and then switched to a cell phone. Word of hindsight advice - buy the cellphone and the cards together - more professional impact

2. Stationary. Only get continuing sheets printed - the one with just the logo and not the full firm details (aka the official letter head). Once you have the continuing sheets printed you can create a word template that would create the letter head on a as and when needed basis. Remember, your address will change atleast a few times before you find the office space that you like and can afford at the same time. When that happens all the previously printed letter heads will go to waste.

3. Profile. Who are we and what do we do as a firm. Most difficult verbage I have ever written but atleast once it was done I knew what we would or wouldn't do for a client.

4. Website. Get a designer, don't do it yourself. Its worth it.

5. Office space and laptop. The two go together especially if you plan on spending a lot more time on the laptop than in the office. Buy a good light weight portable. Personal favorite - think pad t series - the one with the three year warranty. Office space is a different story. You would be surprised how much of an impact having a professional setup makes on your clients and how many great values are available. Rule of thumb - if you look hard enough you can find a decent enough place where you would not need to pay rent - or atleast an arrangement where it could be deferred for a small share of future revenues. Start looking. In our first two years we came close to paying it twice or thrice. Only started paying it by the end of the second year when we could afford it.

First six months

The first six months were difficult.

And then we got used to it.

First bank account

The advance check for the assignment posed a huge problem since we didn't a bank account in the firm's name. I had thought that to get that I would need to first incorporate, file the appropriate paper work with SECP and then once they had given their approval think about moving forward.

Mahmood, the accounting and tax partner, solved the problem. "No need to have a panic attack.. Just open a current accout and title it with your firm name. As long as you work as a sole proprietor, you can skip the incorporation issues. Do that when you are big and strong and ready for all the hassles you will face once you have a private limited company".

Trip to the nearest bank confirmed that this was possible. The bank manager gave me the suspicious "Are you sure you are not a drug or war lord from up north?" look when I asked to open a titled current account. 15 minutes of questioning followed after which they agreed that I looked like a harmless consultant who was just trying to deposit his first client check. Needed two references (Mahmood & Masood), a company seal (250 rupees, city court) and the deed was done.

We had an account in our name.

And then what?

Well the first assignment actually happened with just one phone call. 15 hours of work at 50$ an hour, completed within a week, paid for in 15 days. Not a great rate but a decent beginning given that we were just a week old. Then got two strong leads at a local insurance companies that sort of fell through when the competition pulled the rugs from beneath our feet. Next three months taught actuarial science at local university on Saturdays and spent the remaining week focused on marketing, business development and lead generation.

The university teaching paid for fuel, consumables, cab fares, printing costs and other expenses but it was clear that going head on to compete with the current four consulting firms in Pakistan was not going to yield dividends any time soon. Time for a quick rethink

An introduction at a traditional accounting and consulting shop happened through a close friend. Two partners knew me from my earlier days in Karachi and were more than happy to talk about how we could all work together. After a month of conversations, in May '03 finally agreed to share office space on a trial basis and see if it would work out in the long run. Within ten days closed on our first assignment together for 3000 dollars. We now had access to space, stationary, phone lines, profiles, daylong internet connectivity, laser printers and websites.

Erum had joined us in February on a temporary, "I will work from home, just like you do" basis. She had taken the lead on our first shot at developing an inhouse actuarial valuation solution. With our new deal she got a cubicle and we started thinking about what we could possibly do with out new found wealth. (After five months of zilch, that is what 3K US looks like)

Startup Checklist

What did I need to get started?

Capital - Didn't have any. For website hosting asked Will to help out for the first few months and he put aside a folder on his site for Alchemy. For logo design and letter heads Sama and Nadeem volunteered. Business cards and stationary - wasn't too sure if I really needed them at this stage. First few presentations just dumped the logo on word and used that as a makeshift letter head.

Office space - Put a beach chair in an empty room upstairs in our home and sat down with my laptop. The HP deskjet printer went in the kitchen. Books, directories, paper went right next to the beach chair

Phone lines - For now home number would have to do.

Staff - To do what, we were hardly open for business.

What was I going to do?

Iteration one - Consulting actuaries - focusing on human capital and traditional actuarial work in Pakistan and the region

Day One - Context

Had two offers on the table. Both below market and not exactly along the lines of what I wanted to do. The third conversation was not going anywhere. One kid at home, one kid on the way, broke, heavily in debt and a recent return from the land of enduring freedom and unlimited opportunity, it was a completely irrational decision on my part to be an entrepreneur again. Well after loosing a fortune in southern California, burning up whatever else was left in Karachi didn't sound like such a bad deal, given that there wasn't much left to burn.

What is a guy got to do? Decided to dump every thing and do the startup thing all over again.. That was two years, two months ago. Let's see if I can remember it all.

Day One - Part II

Why work for oneself at all in an emerging market?

ans. The opportunity cost is too low since no one pays you what you are really worth and the payoff is very tempting since the margins for any entrepreneur in our inefficient markets are too high. If you can live with the high risk the rewards are equally generous

What do I need?

ans. Patience and attitude

What about capital?

ans. As long as your living costs are covered implying that you have a roof on your head and your family is willing to feed you, your business will generate all the capital you need to invest or reinvest as you grow and prosper.

What about experience and education?

ans. Fools learn from experience, wise men learn from fools.


What do I do, How do I start?

ans. Read on

Day one

Exactly two years two months too late.

What exactly does it take to get up and running Southern California/American dream style in Pakistan? Interested, read on