Starting up? Keep this in Mind
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These are indeed exciting times. Thousands of Indians are throwing away the security of a job and starting up. If you are planning to start up, here are some things I have learnt as an entrepreneur of over 15 years, which you may find helpful.First check if you are cut out to be an entrepreneur. It is not enough for an entrepreneur to be smart, intelligent, hardworking, thick-skinned, multi-tasking, people’s person etc. A first generation entrepreneur must be “brupid” — a combination of bravery and stupidity to start up.
In addition, an entrepreneur must possess uncompromisingly high standards of personal integrity.
1. Most entrepreneurs are obsessed with the big idea. Frankly ideas are worthless; a dime a dozen. Instead focus on a customer problem you are trying to solve. This problem-solution should define your startup. If you are planning a different solution to an existing problem, ensure your solution is better, faster, cheaper than the existing ones (your competition). You should try and tick at least two of the boxes. If you can tick all three, which means your solution is better and faster and cheaper than competition, you have a potential winner on your hands.
Then talk to as many customers (B2C or B2B) as you can and find out if enough of them will be willing to pay for your solution. This will determine if you can build a scalable business model.
2. There is no specific rule on the minimum number of co-founders but anything beyond four may become cumbersome. You can even be a sole founder if it works for you. All co-founders must have some common backgrounds: friends, college mates, hostel mates, school classmates, colleagues, customers, partners etc.
The experience of having spent time together earlier will help when the startup faces tough times. It is also important that the co-founders bring different strengths and skills to the table. There’s really no point if all four co-founders can write great code but no one has any sales, marketing or operations experience.
3. Build a business plan next. Make this as detailed and comprehensive as possible with sharp strategies, detailed SWOTs and clear numbers. I suggest a '2 X 2 X 2' theory to make your plan robust. After your plan is ready, try this: divide your sales by two, divide your gross margins by 2 and multiply your costs by 2. This is your real plan because it allows for things to go wrong. Remember, in a start-up, shit happens.
4. Never ever forget that the purpose of your business is to make money and not raise money. Too many entrepreneurs in India believe that the only metric for success of a startup is the number of funding rounds it raises.
Nothing can be further from the truth. If you have raised lots of funding and still need more capital to fund your losses, it just shows that your business is badly managed. Remember, a business has no business being called a business if it does not make money.
5.Pundits will tell you to fail fast and pivot. Do not believe this. You should think hard, evaluate all options, asses the risks and challenges and then start a venture. Once you do this, persevere with your mind, body, heart and soul and give your startup the time and respect it deserves. Too many entrepreneurs start a venture and after six months decide to do something else. This is neither pivoting nor failing fast. It just shows poor thinking and planning.
6. Keep a tight control on costs and expenses. Follow this simple rule: till you achieve break even, spend money only on stuff that your customer will see or experience. Too many entrepreneurs raise funds from investors and promptly spend it on buying fancy personal cars and renting expensive office spaces which is a bad practice.
7.Build systems and processes from day one and do not postpone this activity for later. Without robust systems and processes, your business will never scale well.
8. Success is a matter of luck, ask any failure. The most important ingredient for your start-up to succeed is good fortune. Unfortunately, you cannot plan or prepare for this. You will find out if you are lucky or not only after starting up.
9. So, go ahead and start up. Over 95% of all start-ups will fail but 100% of entrepreneurs will succeed. Starting up is success in itself.