Building a Business? Decide between the Balance Sheet way or the Profit & Loss way!

I've been involved in building, running, starting and closing all kinds of businesses for the past 25 years.

It's clear to me that in this age and time, when Entrepreneurs have many options and routes to take, they must be clear on 2 fundamental issues that I have always encountered.

These are presented below:

Special credit to Asha for lots of proof reading and editing!
*****
The link to the same PPT on Slideshare below:

Tags: Balance Sheet, Business, Profit and Loss, Starting Up

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Great, 18 slides and 30 mins in absorbing the framework well spent:)

Thanks for sharing with the junta!

Dear Alok Sir,

        I am currently working on http://buyhatke.com which is a unique combination of meta search (B/S business) http://compare.buyhatke.com and penny auction (P/L business)  I would like to know the concept of Investor valuation model which I should pitch to an investor as it entails both things in it. You have described in the slide about goodwill shares to be given to investors and no permanent equity. I have for the first time forayed into entrepreneurship and do not have much experience about investors . but certainly know that they can be the make / break person in a venture's success. So can you help me in getting some information about the valuation models for such businesses. Eagerly awaiting reply, 

Promising ( to be P and L) B/S business get acquired by cash generating P and L business - youtube and google, hotmail and Microsoft.

to be doom B/S business get acquired by another B/S business - Letsbuy and Flipkart

Amazing clarity Alok needed for any Entrepreneur who is about to start his own business or have already started the business. I think this thought process will help both the start up and its investor to find an answer to the friction they may be having because of the lack of decision (Such as whether the business is Balance Sheet or Profit & Loss) Many Entrepreneurs succumb to the easy capital provided by some eager investors who wanted to drive the business P & L way without understanding that the business in question is actually of Balance Sheet type and it will yield only when the value would be created. A great learning for me as usual and I hope it will prove to be a great learning for all the start ups and investors who fund those start ups 

Awesome...Just another absolutely awesome article......

Am not sure you can demarcate start ups as just these two kinds of businesses. A runaway success ecommerce site like threadless or spreadshirt did focus on making money from day one. 

I would think that one needs to be prudent at all times with funds whatever type of business one builds. 

Wow! Fabulously well communicated. Alok, please do write often more via slides - makes it easy even for lazy-to-read-online people like me!!!

Very useful, Alok. Many thanks!

Great Presentation! I am going to refer to it time and again. :)
Thanks, for sharing.

Prasant

Dear Alok,

I'm a post doc doing cancer research and an aspiring entrepreneur. This is the best  illustration I have read about balance sheet and profit and loss type of business. Thank you very much for educating a research oriented entrepreneur like me.

Thanks

Saravana Murthy

Good !!! One of the best article from you. This one has the potential of future division of business.

What you think about mixing both ??

You can complain of focus. But not every entrepreneur in the world is lucky enough to  get a VC to fund him.

That doesnt mean he has leave his dreams in trash..So you need to make your bread and same time presume your technology dreams. In such situations I think a mix of both is suitable.

Great slides..Love it.

Great article. Very insightful.

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