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From Penniless Billionaires to Bankruptcy: Forever 21

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You start from scratch and work very hard. From being nothing to being extremely wealthy, it is  a tough ride. But you know what is tougher? The fall after that. The fall to a big zero, yet again.  At some point you are on top of the mountain but as soon as you start enjoying the peak, you come down with a run.

Success does not always come to your door knocking around and opening the ways for you. Do you think that all stories have happy endings? Well, the answer is no. Be willing to get cut if you wish to be a diamond.

This story is about how the biggest of companies fail because they refuse to change with time.

Forever 21, a US based top notch clothing brand – how did it all start? What is the story behind the founders of Forever 21? How easy it was to become a successful brand and how easy was it for the owners to start something entirely new?

A south Korean husband-wife duo launched Forever 21 in 1984, in Los Angeles. From working at gas stations to owning a fashion house, Forever 21’s owners, Jin Sook and Do Won Chang, managed to transform their lives from rags to riches.

Source: Facebook

Starting of the harrowing journey in California:

When the duo entered California, they were penniless, did not have fluency in English, and college degrees.

The journey was indeed no cake walk for them. Do Won had to work as a janitor for gas pumping and later serve coffees to survive and feed himself. 

Do Won stated in his interview with Forbes how survival was very difficult in South Korea during those times, and opportunities were very narrow. 

Without wasting a single day, he just started surfing through various classified sections for jobs and landed on various interviews. He was washing dishes and preparing meals in the coffee shops with a minimum wage of around $3 per hour. To have a comfortable living, he started with eight hours of overtime working at a gas station and then  got into the office cleaning business, which kept him busy until midnight.

Also read: Starbucks: How It Became the Coffee Hub and Some Lesser Known Facts

During his work hours at the gas station, Won noticed that the owners and founders of garment industries drove the nicest cars and had an elite class living. Taking inspiration from this, he took a job at a clothing store and chased success. 

Source: https://insider.com/

Fashion 21 to Forever 21:

Three years later in 1984, the couple managed to save $11,000  and started a 900 square foot store known as Fashion 21.

Yes, Forever 21 earlier was Fashion 21!

Fashion 21 make $700,000 in the  very first year by acquiring merchandise directly from the manufacturers at discounts. The success was so phenomenal that every six months, they launched a new store and the brand was soon named Forever 21.

Source: https://insider.com/

During the great recession in 2008, they aimed to open more stores and create about 7,000 jobs within a year and his plans were not only about sales and profits but also to increase the job opportunities for people. Around 480 stores all across the world were set up that generated about 3 billion dollars every year.

Also read: A Verdict for the Massive Unicorns! Gains or Losses

But ups and downs are a part of living, and just like how successful Forever 21 became, from 2019 there has been no good day for them!  

Source: https://www.forbes.com/

The transition from being ‘penniless became billionaires’ changed to ‘becoming bankrupt!’

Fast Fashion Kills!

With Jin Sook approving about 400 designs every day, they aimed to open 600 new stores in three years from 2017. However, this aggression for expansion led to their design being more common and they lacked to cope and manage with the changes in the consumer requirements. People preferred online buying and less-expensive products that Forever 21 didn’t cater to. With time it failed to become a brand that would understand consumer sentiments and even business ethics.

They were reported to pay late to some vendors and the delivery company scrapped the contracts to cover 171 stores. This dropped its business by 50%. 

Losing the competition to H&M and Zara, soon Forever 21 became a big joke with $500 million debt and filed for bankruptcy. The company plans to close the less profitable stores in Europe and Asia, and continue with the profitable ones in Mexico, Latin America, and has exit plans for various other countries. 

Also read: Mind games: The depression of an entrepreneur

As the negotiations continue, the number of stores to be closed is still hidden. They just aim to sustain their position in the US and to get back their buyers and success!

FOREVER 21 did not understand buyer’s sentiments & technological changes. They failed to realize that to stay on top they need to change their business model.   The business that adapts and moulds to changing situations is the one that succeeds while the rest only head towards their doom. This was the main reason why even after garnering so much popularity, FOREVER 21 succumbed to a not so happy ending. Change is the only constant in life!

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Private Company vs Public Company

The difference is more than literal

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Private Company vs Public Company

Do you know why you cannot buy shares of a private company?

So, can you only buy shares of a public company like ONGC, IRCTC, Indian Oil, etc.?

Then why are the shares of private companies like Infosys and Wipro listed on the stock exchange? Are these private companies to begin with?

Do you know a private company cannot have more than 200 members?

OMG! Somebody please answer all these questions.

Yes, the difference is more than literal.

Let us have a cut and dried distinction between a private and a public company.

Also read: Citibank Is Shutting Down Operations in India. What Will Happen to the Account Holders’ Money?

Definition of Company

Let us take the bull by its horns and get the definitions out from the textbooks.

Definition of Company

Companies Act 2013

A company is a legal entity that is formed by different individuals to generate profits through their commercial activities.

Majorly, a company can be classified into two strands- public company and private company.

Before knowing the difference between a public company and a private company, it is of utmost importance to check on the definitions of a public company and a private company as per the Companies Act 2013.

Public Company

Public Company

According to the Companies Act, 2013, a “public company” is a company which—

(a) is not a private company

(b) has a minimum paid-up share capital of five lakh rupees

Private Company

Private Company

According to Section 2(68) of the Companies Act, 2013, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them.

According to the Companies Act 2013, a public company has to mandate all legal proceedings which are not mentioned in the definition under Section 2(68) of the Companies Act, 2013, which pertain to a private company.

Difference Between a Public And Private Company

Let’s look at all the major pointers which differentiate a public Company and a private company.

Minimum Number of Members

In a public company, a minimum of 7 members is required to form a company; whereas a private company requires at least 2 members to form a company.

Maximum Number of Members

In a private company, a maximum of 200 members can be present to form a company; whereas in a public company there is no such restriction on the maximum number of members to form a public company.

Invitation To Public

A public company can freely invite the public for subscription, which implies it can issue a prospectus. On the other hand, a public company is prohibited from inviting the public for its share capital, which means a private company cannot issue a prospectus.

Number Of Directors

In a private company, a minimum of 2 directors is required; whereas in a public company, a minimum of 3 directors is required.

Transferability Of Shares

There is no restriction on transferability of shares in a public company; whereas in a private company there are complete restrictions on transferability of shares, through its article of association.

Annual Report

Annual Report

A public company must disclose the annual financial report; whereas for a private company, there is no such obligation to disclose their annual report to the public.

Index Of Members

In a public company, it is mandatory to maintain an index of all members in the company, whereas in a private company, it is not needed to maintain the index of its members.

Paid-Up Capital

The minimum paid-up capital for a private company is Rs. 1 lakhs; whereas the minimum paid-up capital for a public company is greater than that of a private company. It is Rs. 5 lakhs for a public company.

Director’s/Managerial Remuneration

In case of a public company, it is defined that total managerial remuneration cannot exceed 11% of net profits and in the case of inadequate profit, the maximum amount to be paid is Rs. 87,500. Whereas in a private company there is no such restriction on the maximum cap for directors’ remuneration.

Quorum For Meetings

In the case of a public company, it is mandatory to have a personal presence of five members in a meeting to constitute quorum, whereas in a private company, it requires a minimum of two members to maintain a quorum for meetings.

Below is an array with a list of pointers that differentiates a public company and a private company.

S.NOBASISPUBLIC COMPANYPRIVATE COMPANY
1MINIMUM MEMBERSAT LEAST 7 MEMBERSAT LEAST 2MEMBERS
2MAXIMUM MEMBERSNO MAXIMUM LIMITCAN’T EXCEED 200 MEMBERS
3INVITATION TO PUBLIC FOR SHARE CAPITALPOSSIBLE WITH THE HELP OF PROSPECTUSCAN’T INVITE PUBLIC FOR ITS SHARE
4NUMBER OF DIRECTORSMINIMUM OF 3 DIRECTORSMINIMUM OF 2 DIRECTORS
5TRANSFERABILITY OF SHARESFREELY TRANSFERABLERESTRICTIONS ON TRANSFERABILITY
6ANNUAL REPORTCOMPULSORY TO SUBMIT ANNUAL REPORT TO ROCNOT A MANDATE TO SUBMIT ANNUAL REPORT TO ROC
7INDEX OF MEMBERSMAINTAINING INDEX OF MEMBERS IS MANDATENO NEED TO MAINTAIN INDEX OF MEMBERS
8PAID-UP CAPITAL5,00,0001,00,000
9DIRECTORS/MANAGERIAL REMUNERATIONCANNOT EXCEED 11% OF NET PROFITNO LIMIT / NO RESTRICTIONS
10QUORUM FOR MEETINGS52

“The best investment is in the tools of one’s own trade.”- Benjamin Franklin

Benjamin Franklin Quote

It is always better to be well versed with the tools of one’s own trade and the management of the inflows and outflows.

An avid tradesman associates their trade to generate profits and simplify the trade complexities by forming a company. These differences stated above lay down the basics of companies and form a guided path for a better approach to start with a company.

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Here Is Why Entrepreneurs Should Go Out and Start Networking

Don’t hide behind. Face your circles. It’s high time you start networking.

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Networking of Entrepreneurs

We have often watched Hindi films where protagonists aspire to be a rich men as a kid. And hence they start thinking of different business ideas to be successful.

Well, this happens in reality as well. Who doesn’t dream of starting their own business one day, right?

However, business is not as easy as eating a piece of cake. And no, you don’t need to have a Ph.D. or an MBA degree to start a business.

You just need to have clarity of thoughts; about the business idea, sales and marketing, and most importantly, NETWORKING.

Today, everyone needs everything. The circle of needs and demands has become wider. Everything in entrepreneurship is becoming more interconnected. Just like the Past, Present, and Future in the web series “Dark”.

Networking is the one and only way to get to know what’s around you. From having conversations with your parents to your fruit vendors or even your house helps, you never know what brings you to the peak of your business.

We will share our two cents to convince you enough to go out and start networking if you are a budding entrepreneur. Pardon us if these two cents become 4 or more, but you will definitely not regret reading this till the end.

Entrepreneurship And Networking

The first thing that any budding entrepreneur does, while starting their own business, is to spread the word about it.

The first set of people that they talk to are their family, friends, and even banks (for financial purposes). Although these efforts may or may not materialize into something fruitful, you learn a thing or two about the ABCs of networking.

Entrepreneurship And Networking

Networking is one way to get clarity of thoughts about your business. It’s like building a blueprint of your business in mind. You not only know the industry better but also get to know the loopholes and healthy shortcuts that will save time and increase efficiency.

In the ABCs of business, “A” stands for “recognizing the needs and expectations of people around you.”

Networking is the first step to recognize the gap between demand and supply. It’s similar to providing electricity to those areas with no light, and the idea and motivation behind it.

So now that you are still reading, let’s go further and discuss the importance of networking in entrepreneurship:

Builds Trust And Respect

You may or may not earn money every day from your business. But once you earn trust and respect in the market, there is no way that people will forget you easily.

It’s a fact.

Earning money is easy.

But earning trust and respect takes more effort.

Networking with your business peers or veterans will get you noticed. Initially, you won’t find them paying heed to you, but once they do, they are never going to leave you.

Builds Trust And Respect

People believe in aggressive marketing to increase sales and business. But try aggressive networking instead, and there will be no stopping for you in the future.

Go Social

Remember, making friends in schools and colleges? It’s a similar situation in entrepreneurship, too.

Going social is one way you get confidence in networking with people in the future.

Go Social

Did you ever come across someone who would go to a restaurant with you and start talking to the waiters and receptionists?

Well, you may feel awkward about it, but that’s their first step to get to know the surrounding market.

Start from a party that you attend, be it a family party or a party with friends. Join a group of your choice and listen to the conversations. Once you get the grip of it, start by putting forth your views and then turn it around to your business idea. This may look boring and slow, but slow and steady will definitely win the race.

Today, there are many millennial-made apps, like Bumble, LinkedIn, etc. that encourage people to build an entrepreneurial network in any industry of their choice. Start posting. Start swiping right to the connections that interest you.

For that matter, you can even join dating apps to build professional connections. Your first conversation about your business will be a good ice-breaker (You’ll thank us later for this pro tip).

Don’t Be Selective In Your Own Circles

A very common mistake that most “choosy” or “picky” people do, is being very selective in deciding who to network with.

Today, almost all industries are interconnected. A top-class hospital will always need catering or food services for their staff and patients. A hotel will always want to have options for good clothes vendors for room and restaurant linen.

So if you limit yourself to one or two industries, and sideline others, chances are that you may lose a lot of opportunities.

Expand yourself. Even if you are not sure about it at first. Take that first call that says “our budget is low”, when you know that you have a different area of expertise to explore.

Your Shyness And Fear Will Only Put You Behind The Race

Entrepreneurship requires you to go “out-of-your-circles” more than going “out-of-the-box”.

You are likely to face uncomfortable situations all the time. You have to become an extrovert if you are a highly introverted person. You can’t hide from people who you dislike. You can’t say goodbye to those people whom you are done working with.

Your fear, your shyness will start putting you behind the race of a successful entrepreneur.

You have to be outspoken. Pave your way and lead it too. Take others along the way and build a huge business “family”.

Remember Abhishek Bachchan in the film “Guru”?

No, you need not be exactly like him, but you are expected to know why to be like him. And take your own decisions from the existing lessons.

It’s A Long Road That Will Definitely Lead You To Your Vision

Networking is a continuous process. You don’t stop after a certain level of achievement.

Starting a business is not enough, you have to keep it running. And for that purpose, you may need to explore your potential networks.

It’s A Long Road That Will Definitely Lead You To Your Vision

It’s often expected from budding entrepreneurs to network only with business-minded people to start and run a business successfully. What they don’t realize is that business is made by people, for people, and with people.

So start networking – whether virtually, or face-to-face. Get that business idea in place, get started with your plans, and you will surely reach a place where you can write “successful entrepreneur” in your social media bio.

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2021’s India Is Atmanirbhar: 10 Desi Unicorn Startups

With 10 startups joining the unicorn club in just 4 months of 2021, is India moving towards Atmanirbhartha?

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2021’s India is Atmanirbhar - 10 Indian Unicorn Startups

The Many Firsts of a Fantastic First Quarter of 2021!

The Indian startup ecosystem got an impressive start in the first quarter of 2021. As per Venture Intelligence, Indian startups witnessed the highest investment in two years, and the capital flow was $4.2 billion!

This is not all.

Most of the startups saw a three-fold hike in valuation in their recent funding rounds. And among these, 10 got valued at more than $1 billion.

And hence, the Indian startup ecosystem received its new set of unicorns.

The unicorn story of 2021 is unique.

Why?

Because it is the one with many firsts.

The first health tech, social commerce, e-pharmacy, and infrastructure technology that made its way into the unicorn club.

According to the NASSCOM report, India will have 50 unicorns by the end of 2021.

But many industry experts and research firms believe that, if the current rate continues, India would easily surpass this number.

Also read: How WazirX Is Dealing With the Growing Crypto Demands in India?

Here is the list of 10 Indian startups that gave 2021 a pleasant start.

  • Digit Insurance
  • Innovaccer
  • Five Star Business Finance
  • Meesho
  • Infra.Market
  • CRED
  • Pharmeasy
  • Groww
  • Gupshup
  • ShareChat

The Beginning of Unicorn

The Beginning of Unicorn
Source

If you know any entrepreneur personally, you may have an idea how difficult it is to raise the funds for a startup. It is definitely not a cakewalk.

The fundraising usually begins with family and friends. And as the company expands, it approaches angel investors, and then goes for the venture capitalists for the fund acquisition.

Even though it is a tough task for any startup to gain the investors’ confidence, some horses pass this race and achieve the unicorn tag.

For those who are new to the concept of unicorn, it is a startup that has a valuation of $1 billion or more in the venture capital industry. And Aileen Lee, the founder of Cowboy Ventures, coined the term ‘unicorn’ in 2013.

And since then, startups are continuously striving to attain this prestigious status.

India Didn’t Have a Great Start

India Didn’t Have a Great Start
Source

When Aileen Lee coined the term ‘unicorn’ in 2013, the United States had 39 unicorns.

You may ask, what about India?

There was only one company called InMobi, the mobile-advertising services provider, that could make it to the unicorn club.

India was nowhere closer to the US in the matter of unicorns. The reasons were many:

  • Limited funding
  • Inadequate infrastructure
  • A plethora of social and cultural challenges
  • Lack of talent
  • College students found entrepreneurship unappealing compared to the management jobs in large IT firms.
  • The aspiring entrepreneurs often got rejected by the prospective brides and their families.

India Slowly Picked Up the Pace

India Slowly Picked Up the Pace
Source

Even though India’s unicorn story had a not-so-brilliant start, the current scenario looks promising.

As per Venture Intelligence data, there were only 10 unicorns until 2018, and since then, there has been the addition of 28 unicorns.

For an Indian startup, on average, it would take up to 8 years to turn into a unicorn.

India’s oldest startups, like Naukri.com, MakeMyTrip, and Justdial, which began its operation prior to 2005, took 15 years to achieve the unicorn title.

But this period has shrunk in recent times.

A recent report by Orios Venture Partners shows that the newer technology firms are hitting the billion-dollar mark in less time than their older counterparts.

The younger enterprises such as Swiggy, Rivigo, Razorpay, and Unacademy joined the unicorn club in 5 years on average. Whereas, Udaan, Ola, Electric, and Glance took just 2.4 years!

What could be the reason for this transition?

As per the Orios Venture Partners report, the reason behind the younger startups turning unicorn sooner could be:

  • The prior entrepreneurship experience of the founders of these companies
  • These founders know how to secure the funds more efficiently
  • The growth mindset

There are two other reasons the investors from India, and all over the world, are backing the Indian startups with their funds:

  • Indian startups leveraged the changing consumer behavior and quickly tweaked themselves to satisfy the needs of the customers
  • These companies started functioning on the fact that “Focus on the market and the customers will ensure your growth”

Will ‘Atmanirbhar Bharat’ Soon Be a Reality?

Will ‘Atmanirbhar Bharat’ Soon Be a Reality
Source

India’s honorable Prime Minister, Narendra Modi, raised a clarion call to the country to be self-reliant, aka Atmanirbhar in all senses.

He also outlined the five pillars of Atmanirbhar Bharat:

  • Economy
  • Infrastructure
  • Systems
  • Demography, and
  • Demand

You may ask, how startups can help in making India self-reliant?

The Indian startup ecosystem had a slow and steady evolution from one sector to the other, ranging from IT/ITES to e-commerce, deep technology to hyper delivery networks.

Today, startups also have the most favorable conditions to survive and flourish, starting from the funding, development of regulatory infrastructure, global mergers and acquisitions, the influx of global investors to internationalization.

Do you know what brought this revolution to the world’s third-largest startup ecosystem?

It is the government’s mission to get as many entrepreneurial stories as possible through its programs like Startup India, Stand up India, Digital India, and Vocal for Local.

And the unicorn forms one-tenth of new industries coming into existence every year.

The increase in the number of tech unicorns is driving the investors’ interest in India’s startup ecosystem.

According to a report by NASSCOM, the startups in the technology field alone have created 60,000 direct jobs in 2019.

These data show that, if more startups come into existence, and get support from the investors and from the government, India could see a greater spike in job opportunities.

Atmanirbhar citizens make Atmanirbhar Bharat, don’t you agree?

Also read: How a Young Guy Stood as an Inspiration With His Application for Lazy Readers

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