Entrepreneurship

Entrepreneurs must have a 5-year biz plan: Murthy

By November 5, 2020 No Comments

Entrepreneurs must have a business plan of five years, extendable up to 7-10 years, to become profitable in their ventures, N.R. Narayana Murthy, founder of Infosys Ltd and Catamaran Ventures, said on Wednesday.

He said the role of venture capitalists (VCs) and private equity (PE) firms should extend to mentoring entrepreneurs, helping them overcome challenges, connecting them with prospective customers and employees, and fine-tuning their strategy and action plan.

“I believe in topline growth with concomitant healthy bottomline growth. I believe in leadership by example…in austerity and sacrifice. I believe in getting the best value for money for every cent I spend,” Murthy said at a Morningstar investment conference.

Murthy highlighted the importance of deferred gratification and sacrifice among entrepreneurs to succeed. “Entrepreneurs must focus on controlling costs right from day one,” he said.

The good days of VCs pumping in money may not last forever, Murthy said. “The only thing that will be permanent will be good ideas with a differentiated value proposition.”

To succeed over the long term and survive the business cycles, founders of startups must build confidence and trust among every stakeholder in the company, Murthy said. He called on them to focus on innovation to make their products indispensable for their customers, more affordable, and of better quality.

On corporate governance, Murthy said Indian companies have improved a lot since the economic reforms of 1991. However, it can be further improved with better training of the independent directors, better accountability for the directors, more transparency for the shareholders, better rules for chief executive officer (CEO) compensation, and more transparent whistleblower policies.

Murthy who co-founded Infosys along with six others rejoined the company as its executive chairman in June 2013, two years after his retirement in 2011. During his second stint in 2013-14, Infosys doubled its revenue growth to 11.6% from 5.8% in 2012-13 and improved its operating margin by 200 basis points. He stepped down from Infosys in October 2014 and is currently designated chairman emeritus.

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