'Entrepreneurship Series' by Prof Ashok Jhunjhunwala (IIT-Madras, India)

Profit & Loss and Balance Sheet While cash-flow management is a priority for startups and mature companies, an important question one needs to ask is how much money a company will generate from each unit of product or service that it sells (or plans to sell) .  A good understanding of this will help the entrepreneur arrive at the number of products / service offerings to be sold, for the company to break-even and become profitable.   We will start this blog by understanding  Product / Service Margin . This will play an important role when we take up  Profit and Loss (P&L) computation later. Though a startup may have some distance to go before actually selling products/services, these estimates should be computed even during the product development stage.  Let us term this  Product margin estimation .  When the product/service is being sold, this straightaway gets plugged into the P&L. The margins multiplied by the number...

Taking inspiration from hundreds of startups incubated at IIT Madras & elsewhere over the years Today, Incubation of startups, driving innovative technologies, is flourishing at numerous educational institutions in India. When we started some 25 years back, the institutions had a dilemma. We were often told that educational institutions are meant to pursue only Saraswati , the Goddess of Vidya (knowledge). Businesses are all about the pursuit of Lakshmi , the Goddess of Wealth. As per Indian tradition, mixing Saraswati and Lakshmi is not done. It would negatively impact the educational institutions. Therefore, our early incubation of startups were carried out quietly and largely without formal approvals. However, these startups showed that knowledge generated in educational institutions could indeed be commercialised for the benefit of society. It took considerable time, but the Saraswati – Lakshmi dilemma faded gradually. By the turn of the century, there wer...